Updated: Sep 7, 2019
Are you a travel nurse unsure about how traveling will affect your tax situation ? Here's some advice from a CPA on how to prepare for this upcoming tax season as a traveler.
How the 2018 tax law changes affect travel nurses ?
Employee expense deductions no longer exist. Therefore, Travel Nurses can no longer deduct travel-related expenses, mileage, CEUs, licenses, etc.
Tips For Travel Nurses in Regards To The New Tax Bill
Travel Nurses should ask for higher reimbursements for travel needs and licensing fees from their employer or agency. Since tax rates are lowered under the new tax bill, Travel Nurses should consider a ROTH IRA retirement plan that deducts tax now instead of a tax-deferred traditional 401k or IRS plan in order to avoid paying tax on that money in the future.
What records should I keep so I'm prepared to file my taxes as a travel nurse?
- Contracts - This should show you start date, end date, name of facility, address, taxable hourly rate, amount of tax free stipend
- Pay stubs
- Documents that justify how tax-free stipend was used (i.e proof of lodging, meals mileage, etc.)
How long should I keep the records (in case of audit)?
The IRS has a statute of limitations of 3 years or 5 years in the case of fraud.
For tax free income, the statute of limitations is 7 years.
Are the chances of me getting audited higher because I'm a travel nurse?
Typically everyone has the same chances 1 in 160
If you make 200k or more your chances as 1 in 80
How do I qualify to receive tax free income?
The tax code allows tax-free stipends for all ordinary and necessary expenses incurred while working away from one’s tax home. Therefore, whether or not traveling nurses qualify to receive tax-free stipends depends on where they’re working versus where their tax home is.
What's the difference between a tax home and a permanent residence?
Your tax home is the location in which you earned your taxable income (main place of business)
Your permanent residence is where your permanently reside. For travel nurses, this will be the address listed on your nurse license.
In which state do I pay my income taxes?
You pay taxes to both the state of which you worked and the state of your permanent residence.
However, Most times, you do get credit for taxes paid in each state to offset the state tax. I recommend consulting with a CPA.
Is it true that you have to be at least 50mil away from you home to qualify for tax free stipends?
No, the IRS doesn't have that rule, it was used by the hospital as a general rule of thumb to prevent their full-time workers from picking up contracts.