We all know it’s time for tax season when April rolls around! Being a traveler is an exciting adventure, and the opportunity to work in the best travel nurse destinations is quite the experience. But as wonderful as this opportunity can be, travel nursing still has its unique challenges.
One of these challenges is ensuring you’re keeping track of information relevant to your travel nursing position to pay taxes correctly. How much should you pay in taxes? Where should you pay them, in your home state or the states you’ve worked? It can sound more challenging than it is. Learning about specific details regarding your income taxes can help you maintain your excitement and passion for travel nursing while allowing you to do what you do best. Here’s what every travel nurse needs to know about their taxes for the upcoming year.
Top Thing to Know About Travel Nurse Taxes
Tax Homes And State Income Taxes
Many travelers may confuse a tax home with a permanent home. The average person’s tax home and permanent home are the same places where they earn most of their income. Since travel nurses make money outside their homes, it looks a bit different. If you live in Arizona, for example, but take an assignment in Oregon that lasts for several months, your new tax home might end up being Oregon because you spent more time living and working there.
A general rule for travel nurses is not to stay at one travel nurse assignment for more than 12 months to prevent a switch. However, in most circumstances, applicable state taxes are due in the states where you worked throughout the year. When this happens, your tax home becomes where you pay your state taxes. So even though your physical residence may be in Arizona, you will pay taxes in Oregon because that’s where you spent most of your time.
As a travel nurse, you will always pay state income taxes except in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. You may want to consider these states when searching for travel nursing jobs. Check state laws to see if you have to pay state income taxes in more than one state. Always talk to a tax professional if you have questions about where you owe taxes.
Travel Nurse Non-taxable Income
To qualify for non-taxable wages, travel nurses must have proof of their tax home. To ensure you are eligible for a tax home in the eyes of the IRS:
- Keep proof of any payments you make to show that someone else maintains your primary residence. (I.e., receipts for a house sitter, mortgage, rent, utilities, or home maintenance expenses).
- Maintain your driver’s license and voter registration in your home state.
- Keep your car registered in your home state.
- Return to your permanent home between every contract.
- File a Residence Tax Return with your home state.
If you can’t prove that you have a tax home or don’t meet the qualifications, you will be taxed on the stipend payments you receive as part of your travel nurse pay package.
Other Tax Advantages for Travel Nurses
Besides exploring the country, there are a handful of other benefits for travel nurses that give them tax advantages. Travel nursing stipends cover duplicated living expenses like housing, travel, and meals. They’re not reported as taxable income as long as you prove it’s a duplicated expense. For example, if you’re still paying for utilities at your permanent home but renting short-term housing for your travel nurse assignment, that is a duplicated expense.
Travel nurses receive reimbursements for business-related expenses paid for out-of-pocket that their employer pays back. This is typically done in the form of an expense report. Save all receipts to submit to your employer, and the money you’re reimbursed is tax-free.
Under the new 2018 tax laws, travel nurse tax deductions or write-offs are no longer available. Travel nurses can no longer deduct travel-related expenses—food, mileage, gas, and license fees—and will have to recover these funds through a stipend from their travel nurse agency or in the form of reimbursements for expenses actually sustained.
Beware Of Audits
While the chances are relatively low, travel nurses are more likely to be audited than the average person. This is because the expenses-to-income ratio can look a little suspicious. You could be more at risk if you display high expenses but a low income. It’s always a good idea to prepare and have a paper trail for everything.
To get through or avoid an audit, find a certified tax professional familiar with traveling healthcare professionals and do not rely solely on your travel nurse recruiter or travel nursing agency for tax advice. Better to be safe than sorry!
Travel nurse taxes can be intimidating, but it becomes easier once you get into the swing of things. When in doubt, consult a professional to guide you through the process. Give yourself plenty of time to prep to put yourself in the best position moving forward!
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