Doing your taxes often seems daunting, especially if you have a new career, like being a travel nurse. However, there are plenty of online resources to help prepare you for completing your taxes promptly and correctly. Here’s the scoop on what travel nurses need to know regarding taxes:
Filing taxes for travel nurses is a different process. Travel nurses have a different income breakdown than other staff members.
You can’t expect to fill out your taxes like say, a staff nurse at a hospital. This is largely due to a difference in income breakdown. Staff nurses typically have a salary that can be taxed specifically. Travel nurses have hourly pay in addition to stipends that are nontaxable. The combination of the two is your total income. These stipends can cover a variety of things – housing, food (you typically get a set weekly stipend for meals and groceries), and miscellaneous expenses related to work. They are nontaxable because they are required for you to successfully work your job as a travel nurse, thus not counting as part of your taxable income.
To get the most bang for your buck, it’s in your best interest (and the travel nurse agency, like Stability Healthcare) to keep your hourly rate on the modest side, but have more nontaxable stipends. However, don’t have an hourly rate that is too low. This can affect you later on in the future if you apply for loans, collect Social Security payments, etc. For example, the less you make via your hourly wage, the less Social Security funds you’ll be able to collect later on, since nontaxable stipends aren’t included in this number.
There are a few different places you can see examples of income breakdowns like travelnursing.org, Blue Pipes, NurseFly, etc. However, this will not be your exact breakdown. It depends on your position and contract.
You have to have a tax home in order to receive nontaxable income.
According to Turbotax, “the IRS defines your tax home as the ‘entire city or general area’ of your workplace.” If you work in a different state or city you primarily reside in, the location of your workplace would be your tax home. For example, if you live in Chicago, IL but your travel nurse position is in Nashville, TN then Nashville would qualify as your tax home. As the IRS states, “travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. You can’t deduct expenses that are lavish or extravagant, or that are for personal purposes.”
You have to prove to the IRS that you have a tax home. In order to do this, you must visit your primary residence at least once every twelve months and pay for the expenses required to maintain this home. If you work somewhere longer than a year, then it’s considered indefinite, and would not prove you have a tax home.
If you fail to prove that you have a tax home, then those nontaxable stipends aforementioned will be taxed.
There are some specific ways to help you prove you have a tax home.
- Keep a record of all the expenses you have to maintain your primary living residence. This can be tracking mortgage payments, saving bills for utilities like the electric bill, paying rent, etc.
- Rep your home state. Be registered to vote in your primary living area, register your car there, and don’t get a new driver’s license in a different state.
- Don’t forget, you must visit your primary residence at least once every 12 months. Keep a record of this visit through photos, flight records, etc. An easy way to do this is by making an effort to return to your primary residence after every assignment.
Don’t forget about state taxes.
Being a travel nurse complicates state taxing a bit, but don’t fret! Remember to file before the typical state tax deadline of April 15th (although you may want to prepare plenty in advance). In addition to your tax home’s state, you also have to pay nonresident taxes for every state you worked in during that tax year. Some travel nurses can work in several states within a tax year.
How to avoid an audit.
Record everything! Although it may seem easy to have digital receipts, it’s also good, and encouraged, to keep physical copies. Every receipt related to a stipend is necessary. Keep a special folder to keep track of physical receipts and to write down the mileage. If you have digital receipts, create an organized folder in a special drive like Google Drive or Dropbox. Keep all your assignment contracts in one place.
The most important thing: take care of yourself and keep the future in mind.
As a general rule of thumb, it’s a good idea to take care of yourself and have savings in case any future issues arise. Many travel agencies do not get paid time off. If you have to take time off of work, you will not get paid, so don’t rely on just living stipends. Have a backup plan.
Don’t hesitate to ask questions.
If you need help, don’t be afraid to ask! Your travel nurse agency is there to answer any general questions you may have. If you have tax specific questions (like about a specific state’s taxing), reach out to an account that is experienced in working with travel nurses. They’ll be able to give you pointers and aid you in the tax filing process.
All in all, although filling out taxes as a travel nurse is different than other medical careers, it’s easy if you know what you’re doing. Give yourself plenty of time to prep in order to put yourself in the best position moving forward.
If you’re interested in becoming a travel nurse, learn more at Stability Healthcare! Visit the travel nurse blog for more insight.
