Intro to Taxes: What Travel Nurses Need to Know
It’s that time of year again, the post-holiday season is among us, which means it’s tax time soon! And it’s never too early to start thinking about and gathering the information needed to file. To get you started, we wanted to provide a heads up on a few important things to know when filing taxes as a travel nurse.
Expect Filing to be Different Than Staff Positions You May Have Had in the Past
The process of filing taxes is typically slightly different for staff nurses and other medical professionals when compared to travel nurses. This is because the two positions pay differently. Unlike staff nurses, travel nurses most often receive both an hourly base rate and additional payments that are eligible to be non-taxed. These two forms of income make up the total compensation of a travel nurses pay package. Most often, the non-taxed payments will be in the form stipends for things like housing, meals and other work-related expenses. Because these are legally seen as expense reimbursements, they are eligible to not be taxed. The specific details for your income will be available in your pay package and should be noted for tax purposes.
Having a “Tax Home” is Imperative in Avoiding Taxes on Your Stipends
As a travel nurse, in order to make sure you qualify for non-taxable income, it is imperative that you prove to the IRS that you have a “tax home”. Doing this will help make sure you do not get taxed on the stipends for meals, housing, etc that we discussed previously. If you do not have a tax home as the IRS understands it, those stipends will become taxable.
According to the IRS, a tax home is defined 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. For most people who work where their primary residence is, qualifying for a tax home is simple. However, as travel nurses whose main area of income is not where their primary residence is, this process can be more complicated. You will have to make sure you visit your primary residence once within a 12-month period and prove that you are consistently paying to maintain the residence as well. An article in Nursing, offers some helpful tips for qualifying for a tax home according to the IRS:
- Keep proof of any payments you are making to show that someone else is maintaining your primary residence. For instance, things like 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.
- Keep a per-diem position, if possible, in your home state.
- Return to your permanent home at least once every 12 months.
- File a Residence Tax Return with your home state.
You’ll Need to File in Multiple States
Travel nurses not only have to file taxes in the state, which is their permanent tax home, but they also have to file non-resident tax returns in each of the states they have worked. Every state does have different laws for filing taxes, so it will be very important for you to make sure you are up to date on the deadlines and expectations of each state you have worked in.
Feeling overwhelmed by the idea of filing taxes? Don’t be afraid to seek out professional help from a Certified Accountant who can help make sure you are crossing all of your t’s and dotting all of your i’s before April 15th.