Travel nurse taxes can be complicated. While there can be many tax benefits for travel nurses, it’s important to understand what they are before filing your returns.
1. Understand your employment status
Your tax status depends on your employment status. If you are employed by a staffing agency and receive a W-2 form at the end of each year, you are an employee. If you receive 1099 forms at the end of each year from the organizations that you work for, you are self-employed. Tax benefits and obligations can be different for each classification, so it is important to know how the IRS and state tax agencies understand your status. If you have questions about this, contact a tax professional.
2. Establish a tax home
As a travel nurse, your compensation package likely includes a tax-free stipend for housing, meals and incidentals. While costs for housing, food, and general living expenses aren’t normally tax-deductible, travel nurses may be in a special category because your job requires you to travel. If you can prove that your main residence (your “tax home”) is a significant distance from places where you have been working, compensation for housing and related expenses may be non-taxable.
Be aware, however, that your deductions may be challenged by the IRS if you can’t show that you have a tax home and that you were living away from that home so that you could do your job. This can happen if the IRS decides that you are an “itinerant worker,” someone without a permanent home. Itinerant workers can’t deduct lodging and meal costs.
You can establish your tax home by collecting and maintaining documentation, such as a driver’s license issued by your tax home state, a house title, lease, or tax forms and other official mail sent to your address.
3. Deduct professional expenses
Professional expenses are payments for things like continuing education, professional certifications, and industry organizations. In many cases these costs are deductible, but your employment classification and status determines whether you are eligible for a tax break.
Continuing Education
Continuing education classes needed to maintain your nursing license may be deductible providing that you aren’t also receiving reimbursement for these expenses through your agency.
Professional Certifications
If you are self-employed, you may be able to deduct the cost of professional certifications and renewals.
Industry Organization Dues
If you are self-employed, you may be able to deduct the cost of industry organization dues and renewals.
4. Document your deductions
When you file your taxes, you’ll need to itemize and document your deductible expenses and non-taxable compensation. Collect, save, and organize receipts for all of your expenses so that you’ll have what you need at tax time.
Of course, this is easier said than done: As a busy nurse, it’s easy to lose track of receipts and other documentation. There are a couple of ways to simplify this process, however:
1. Use your phone to take photos of all paper receipts. Some banking apps incorporate this function and then sort your receipts into reports that you can use for tax purposes.
2. Use a business credit card exclusively for your professional spending and expenses. Business credit cards often include expense and accounting features that can help you track your deductible spending.
3. CLC’s centralized billing can assist with managing and documenting lodging costs, keeping these clearly marked and organized.
Travel nursing is a demanding, yet rewarding career. You can make it more rewarding by claiming every deduction that you are entitled to.
