Travel nursing is no lesser than a roller coaster ride but better.
Travel nurse taxes can be tricky as compared to those of permanent nurses. Where hectic schedule and travelling almost every four months can make travel nurse’s life miserable, travel nurse taxes stay no behind. They are nothing but an additional layer of responsibility on the shoulder of a travel nurse.
As a new nurse, you may be burdened by the word “taxes”. Travel nurse taxes are different, but maybe in a better way? The decision is yours to make.
Today we will be going through a summary of all that you need to know about travel nurse taxes. Without further ado, let’s get to it.
How do taxes work with a Travel Nurse?
Understanding travel nurse taxes may look challenging initially, but we are as excited to explain as you are to learn!
Travel Nurse Tax Home
The IRS claims that tax homes are the “principal place of business”, which is the central place of your employment or business. For travel nurses, tax homes may not be their official homes, but they can be. Travel nurses travel from region to region, so it is not possible to change tax home every four months, right?
To summarize, tax homes are where you have made most of your income.
You might be wondering what the purpose of having a tax home is. No matter how weird this idea looks at first, it would be best if you went into depth to understand it.
Having a tax home is an essential part of being a travel nurse. It helps you get deductions on your travel expenses, housing, laundry and meals, cellular costs, parking fees, tolls, uniforms, and internet costs.
Remember: if you are working within your tax home, you are not eligible for tax-free stipends.
How to Maintain a Tax Home?
Aforementioned is the question we are usually asked. It is quite simple to comprehend.
You work as a travel nurse in the area where your permanent residence; tax home is. You retain your routine expenses and keep a record of costs to make sure that you have been using your tax home. These expenses include rent, utility, and maintenance expenses.
Do not abandon that home when you travel to other states. The best you can do is ask a family member to stay there as long as you don’t.
Tip: Make sure to keep your voter registration, car registration, and driving license in your tax home state. Keep visiting your tax home whenever possible (at least once a year)
You are all good to go; this place will now be regarded as your tax home.
- Travel Nurse Taxing Tips
These pointers will keep you sharp between your ears and will help you predict certain scenarios that you might have to face later on.
- Do not abandon your tax homes.
- Track your expenses. I call it a significant disadvantage. Travel nurses have to keep a record of all their costs from hotel bills to parking charges.
IKR, this sounds really tough.
- Retain all receipts. AH! Another challenging task is followed by tracking expenses. You have to keep receipts of all the things you bought, food expenses, tolls, and other travel expenses.
You should keep a record of your tax documents and receipts for seven years.
- Keep in mind state income taxes. You have to work in at least 3-4 states in a given tax year. It is essential to keep a record of all US states you worked in and their income taxes. Each US state you work in doesn’t have to have an income tax. Precisely, forty-one states in the USA impose income taxes.
Read about the highest paying states for travel nurses HERE.
- Contact a tax advisor. Doing so may sound childish, and we know you have been doing your taxes yourself since the beginning, but this is the time to step up. You don’t need to feel burdened by your taxes; travel nurse tax advisor has got your back!
- Don’t change your address when you work in a new state. Convince yourself that you are just on vacation when on a travel assignment and you will return to your permanent residence; your tax home when you are free.
Read more about travel nurse housing HERE.
Qualifying for tax-free stipends
I will keep this short. It would help if you kept in mind only a few factors in qualifying for a tax-free stipend.
- Do not abandon your tax home.
- Maintain a living cost at your place of permanent residence
Tip: You can ask your parents or relatives to stay in your tax home when you are not there to make sure you achieve the above point.
- You have earned at least one-fourth of your income in the area of your tax-home
- Do not stay in one state for too long.
Pros and Cons of Travel Nurse Tax Homes
Travel nurses may stand ahead of permanent nurses in overall earning and taxation, but they still need to go through the pros and cons of travel nurse taxing before reaching their final decision.
As I said before, travel nurses stand ahead in terms of the overall income of permanent nurses. Here is why:
Travel nurses are granted tax-free stipends, and travel nurses save up to $10k annually compared to permanent nurses. Also, nurses are free to go anywhere in their breaks; after assignments. Having no tax homes means they stay in hotels and hence more cost. Having a tax home will solve this problem. You can stay there as long as you want between assignments.
Did you know that some agencies won’t offer you assignments until you don’t have a tax home?
Cheers, I got a tax home!
When looking at the other side, tax homes’ disadvantages, travel nursing tax homes sound really creepy.
You have to keep a detailed record of everything you buy, your expenses and receipts for seven years.
My receipts take more room in my apartment than I do. OUCH.
Also, money on maintaining your tax homes may exceed what you are saving. And yes, worst of all, you may not be able to travel throughout the year. This is because you have to keep visiting your tax home; at least once a year.
Travel nurse taxing mistakes to avoid.
Travel nursing is all fun as long as you avoid these mistakes.
Not leaving a place for too long.
You have to keep visiting your tax home. You are allowed to stay at the same place for up to 12 months (doing 3-4 assignments) but NEVER do this. It would be best if you kept visiting your tax home to prove it as your residence. Doing so will help you secure the benefits of your tax home.
Not having a tax home.
You can save a lot when you have a tax home. Why not avail the opportunity?
Not having a tax home drains all your income silently. Not only this, you won’t have a place to live during your breaks. Having a tax home might have its cons, but the advantages it gives outstands everything!
Avoiding state taxes
Avoiding state taxes can end up you being in jail. Other outcomes may be penalties and other interests plus your due tax on your state income taxes. Long story short, the more you wait, the more you pay!
Here is a guideline of state taxes 2021 to help you sort your taxes and pay before the deadline.
Not reading your Travel Nursing Contract in depth.
Mind it: not all travel nursing contracts are the same.
You will end up in trouble if you only skim and scan your contract instead of in-depth analysis. Your Travel nursing contract has details about your startup costs, penalties, and income. Also, it explains the benefits of working in a particular institution. This will significantly help you sort out your taxes beforehand.
Not tracking your expenses
Tracking every expense may sound like a cumbersome task but believe me, it is worth it!
The cost you have to pay by not tracking your expenses will be far greater than the difficulty you will face when tracking your expenses. Save receipts of everything you eat, fuels, toll, and other bills and bring them with you on your annual tax day.
FAQ Travel Nurse Taxes
Now I’ll answer some of the most asked questions about travel nurse taxes. See if they help you out too.
Is travel nurse tax-exempt?
Yes, it is possible and relatively easy to exempt taxes as a travel nurse. Here is how:
Prove that your tax home is your primary area of income. You should earn at least one-fourth of your income there.
Spend at least 30 days a year in your tax home or ask your relatives to stay there to make sure you pay the living expenses.
How to file travel nurse taxes?
You should file travel nurse taxes in your home state; the state you have a tax home in, and all the states you have worked in during your tax year. It is not necessary to work in your home state; you should still file in it. Not doing so can terminate your nursing license.
Is travel nursing worth it without tax home?
Without a tax home, everything will be taxed, whether it be your uniform, internet, cellular expenses, or housing. If a travel nurse earns $30,000 per year, he could end up paying more than one-third of his income in taxes and bills.
I believe that it is not worth it without a tax home.
For how long should I keep my Travel nursing records?
You should be equipped with your mileage logs, lodging expenses, and contracts.
You are advised to keep track of your records for seven years. The IRS can review your documents for up to 6 years after you have filed a return.
Being a travel nurse can help you maximize your income.
It is important to understand tax implications and tax filing requirements before you go ahead with your profession. It may sound not easy at first, but the more you go into depth, the easier it becomes.
We have done our best to explain travel nurse taxes in the minimum words possible. You can read more about travel nurses HERE.
If you have any issues, you can contact a travel nurse tax advisor.
Get in contact with a travel nurse agency now and make the most of your income!