Working as a Travel Nurse or on-the-go Allied Health Professional comes with many unique perks. You get to work when you want, where you want as often as you wish. You have so much more freedom and flexibility than you are likely to find in any other profession. However, all this freedom and excitement come with their own set of stressors and added responsibilities. Among these is the complicated and often chaotic activity of figuring out your year-end taxes, especially when it comes to travel tax.
Taxes for Nurses and other Healthcare Pros are already complicated. Throw in multiple states, travel expenses, and status as an independent contractor, and it starts to look like a ball of tangled EKG wires. It’s essential to think about tax homes, keeping receipts, and knowing your own long and short-term financial goals to keep all your cables in a row.
Here we’ve laid out an essential guide to help you figure out your taxes. Remember that you can always talk to a tax professional if you are unsure.
Basic Travel Nurse income structure
First, it’s crucial to understand how Travel Nursing income differs from that of Staff Nurses. Permanent Medical Professionals are typically paid by the hour. Hourly pay is frequently standard for Travel Pros as well. However, in addition, they receive other “income,” which is considered non-taxable. Non-taxable payments may include stipend payments for travel and living expenses covered by your agency, including housing, meals, travel, and other essentials.
Your pay package should provide a detailed breakdown of the various aspects which make up your total compensation. Typically, Travel Nurses receive a lower base pay than permanent Pros, with the difference made up by non-taxable reimbursements.
The IRS has long held that for a Travel Nurse to receive nontaxable travel benefits (meals, housing, and transportation) while on assignment, the travel assignment must be temporary. For an assignment to be considered temporary, it must be expected to last less than one year.
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Your listed bill rate typically takes all of this into account. A $65 per hour pay rate works out to closer to $20 per hour of taxable income, with the rest representing the non-taxable aspect. You may designate the rest of those wages to cover your working expenses. This designation is often determined by your contract. The agency you are working with may handle this differently, and you should feel free to ask your Healthcare Recruiter to clarify how this works for you.
Travel Nurse non-taxable income
If you were working as a Staff Nurse, you would typically be unable to write off housing, travel, or food expenses on your taxes. Tax-write offs are a unique ability of Travel Nurses and other Allied Pros, but this benefit depends on your ability to prove that you have a “tax home.” Tax homes are defined by the IRS as “the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home.” In other words, where you usually make your money, even if that is a different place than where you maintain legal residence.
You can qualify for a tax home, and therefore non-taxable income in one of two ways:
- If you mainly work in your primary area of residence, you can qualify for a tax home, which is very unusual for Travel Nurses and Allied Pros.
- If you visit your primary residence at least once a year and can prove that you are paying for upkeep on that residence, you can qualify for a tax home, the most common way Travel Nurses and others may be eligible.
Keep in mind that if you cannot prove a tax home, the IRS will consider any stipends you receive as just added income and will therefore be considered taxable.
Qualifying for a tax home
Here are a few simple steps you can take which will help you qualify for a tax home:
- Keep receipts of any expenses put towards home upkeep. Costs incurred may include housesitter bills, utilities, mortgage, rent receipts, etc.
- Make sure your voter registration and ID information reflect the details of your home state.
- Register your car in your home state.
- Maintain a per diem working position in your home state if possible.
- Visit your primary residence at least once per year.
- File residence tax returns in your home state.
State travel tax for Travel Nurses
You will owe both state (where applicable) and federal taxes like everyone else. Because Travel Nursing makes filing taxes more complex, however, the IRS is usually lenient when it comes to requesting extensions. If you need more time, feel free to ask for it.
Keep in mind that you will have to file a state return for every state in which you worked. You will file a residential return in the state where you maintain a permanent home and non-resident in all others. Take a look at their websites to determine the exact requirements for filing income taxes in each state.
Travel tax tips for Healthcare Pros
It’s all too easy to make a mistake on your tax returns. Even if you’ve done your very best and been very, very careful in filling, a big enough mistake can lead to an audit. And no one wants to deal with that!
Here are a few top tips that will help you be as accurate as possible and provide adequate proof to keep you compliant in the event of an audit:
- Keep receipts for everything, especially for necessary purchases made on a work assignment.
- Track housing and lodging expenses while traveling, which may include costs of hotels during layovers, etc.
- Track your travel mileage, including gas, plane tickets, train tickets, etc.
- Track uniform and scrub expenses.
- Track utilities, both in your primary residence and in your temporary housing, if it isn’t included in your rent.
- Track other work-related expenses, such as continuing education courses, certification expenses, and other forms of tuition which may be required to maintain your position.
- Track meals! Travel nurses are among the only professionals who can claim food as a business expense.
Taxes are complex, but having the numbers laid out in front of you can make it a lot simpler. We recommend keeping a binder for all of your relevant receipts and working with a qualified tax accountant to make sure you’re getting everything right.
Looking for your next travel assignment?
With Medely, your next nursing job is only a click away. Travel Nursing opportunities are brought directly to your phone, so you have the control to create your schedule based on your travel needs.
Medley delivers premium pay, maxed out travel stipends, and the ability to book per diem shifts while on an assignment so you can maximize your earnings.
Freedom, flexibility, and support when you need it. Be where you want to be and when you want to be there with Medely today.