Last updated March 21, 2023
The 2023 tax season is quickly approaching, which can mean one of two things for all types of travel nurses: Yay to the host of tax deductions that may be available to you, and nay to having to navigate what might feel like a daunting heap of paperwork.
Whether you’re a seasoned tax nurse with plenty of experience in filing your taxes or have just begun seeing the country in this exhilarating profession, one truth remains: The more knowledge you accrue before attacking your stack of pay slips, tax returns, and receipts, the easier the task will feel—and the more you may be able to reap the unique rewards afforded to tax nurses.
Read on as we unpack tax prep for travel nurses, no matter if you’re working alongside a CPA or using your own tax software.
3 Essential Things to Know About Travel Nurse Taxes
If you worked as a staff nurse at a hospital last year, filing your taxes may end up being a rather straightforward task.
But if you worked as a travel nurse last year or in years past, this can render taxes a touch more complicated.
Here are three crucial things to understand about travel nurse taxes:
#1 You May Have to File in Multiple States
The sunny shores of Florida, the lush greenery of Wisconsin, the architectural splendors of New York—one of the biggest draws of travel nursing is the opportunity to tour a vast swath of the country (or even the world) that you might otherwise not have the chance to explore.
But working in multiple states means that you must also file non-resident tax returns in all of the states (except for non-income tax states) in which you were on travel assignment in the preceding tax year.
This is because:
- Your income will be subject to income tax in every applicable state in which you were on travel assignment
- Wage income may vary from state to state.
To reduce or eliminate the amount of taxes owed, travel nurses bank on their deductions—or business expenses that impact their net income, a subject we’ll leap into below.
#2 Familiarize Yourself with the Concept of a “Tax Home”
You might own a home in Denver but spend several months throughout the year on assignment from Aspen to Alaska. Or perhaps you rent out a studio in San Diego and return home every three to four months to decompress. Regardless of your situation, it’s important to understand what’s deemed your tax home.
The Internal Revenue Service (IRS) classifies a tax home 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.”
Let’s consider an example:
- You and your partner own a home in Jersey City, but you work as an RN in a Manhattan hospital, spend Tuesdays to Saturdays in New York, and return to New Jersey on your days off.
- You cannot write off your public transit fare and Airbnb in Manhattan as it is your site of employment—or, your tax home.
As you can imagine, this is where it gets a bit tricky for a traveling nurse, who often doesn’t have a single place of employment but is sent to different medical facilities throughout the U.S. and beyond. In this case, your travel expenses, lodging, and food can be deducted only if you work on a temporary travel nurse assignment that doesn’t exceed one year and only if you are not already receiving a non-taxable stipend.
To this end, it’s important to maintain a base that qualifies as a permanent residence by the IRS—a topic we’ll hop into next.
#3 Establish and Maintain a Permanent Residence
As we touched upon, in order to be in a position to deduct travel expenses like airfare, temporary rentals, and dining, it’s crucial to hold onto a permanent residence (and if you’re on a travel nurse assignment that exceeds 12 months, that is deemed your permanent residence by the IRS). With this in mind, you may want to:
- Refrain from remaining on assignment in one geographical location for longer than 12 months out of every 24 months.
- Return to your base between assignments. The IRS doesn’t plainly assert how long these visits must last; however, American Nurse recommends a minimum of 30 days per year, a number that’s been arrived at after an earlier case.
Additionally, you will have to show proof of maintaining your tax home—basically, demonstrating that it’s liveable or lived-in. This may entail: ,
- Providing rent or mortgage documents
- Showing canceled checks and/or tax returns
- Submitting copies of your cable, gas, and electric bills
- Providing copies of your assignment contracts
Without proof of a permanent residence, you may be considered a transient by the IRS and unable to claim tax deductions. The logic is this: If you have no home, how are you traveling away from it—and, therefore, why should the cost of a VRBO and an Uber be deducted?
Travel Nurse Agencies and Taxes
Within all of this, you may be asking, what about travel nursing agencies and taxes?
Good question. If you’re employed by a travel nursing agency that provides you with per diem pay, your business expenses—such as subway fare and your morning coffee when you’re on assignment—cannot, as of the 2017 Tax Cuts and Jobs Act, be subtracted as itemized deductions on Schedule A. Instead, this per diem pay, which may also be called your stipend or allowance, helps ensure that you don’t have to pay out of pocket for travel expenses.
What Is Considered Non-Taxable Income?
Non-taxable income is the stipend travel nurses are granted to cover expenses they wouldn’t typically incur at home, such as a Lyft to the airport, lodging, and eating at restaurants. These allowances are not taxed as they are thought of as reimbursements by the IRS.
Naturally, this non-taxable income is only available to nurses who can demonstrate they’re living, essentially, in two places: One in their permanent residence, which requires its own set of expenses, and another “on the road” that requires money for travel nurse housing and daily necessities.
Types of Work-Related Expenses
Handling travel nurse taxes is largely about understanding what you can and can’t write off. Work-related expenses for travel nurses are generally broken down into two categories:
- Travel-related expenses – Simply put, travel-related expenses are the ones that occur when you’re more than 50 miles from your permanent residence/tax home. These may include:
- Travel fares, such as airline tickets, bus fares, train fares, and/or Uber/Lyft/taxis
- Car rental fees
- Vehicle-related fees, like gas, car maintenance, parking, or tolls
- Lodging and meals
- Professional expenses – As a nurse, your education is ongoing—so the expenses associated with maintaining your license can add up. “Professional expenses” refers to courses you may have to take to sit for relicensing exams, including books, nursing journals, and other trade literature. It also includes:
- Costs linked to finding employment
- Wi-Fi and phone usage
- Purchasing and cleaning your uniforms/scrubs
- Malpractice insurance
- Home office equipment and furniture
This is by no means an exhaustive list. What it should underscore is that there are numerous deductions you may be able to make to curb your taxes.
What Happens to States with No Income Tax?
For travel nurses, states without income tax can offer some monetary relief. As of 2023, these states include:
- South Dakota
You might find yourself traveling to any one of these states on assignment. However, if your permanent residence/tax home isn’t on this list, stay aware that you will still be obligated to pay income tax in your primary place of residence.
In other states outside of your permanent residence that do have an income tax, keep in mind that you may not necessarily be double-taxed; rather, some states have reciprocity agreements, so you’ll only have to pay in one state.
State Tax Deadlines
The IRS began accepting and processing state 2022 tax returns on January 23, 2023, and the deadline for filing is April 18, 2023—an additional three days more than usual. If you’re running behind and need more time, you can file an extension, but you must file by October 16, 2023.
FAQs About Travel Nurse Taxes
Tax prep for travel nurses may feel overwhelming. To mitigate your stress, consider these answers to these frequently asked questions:
#1 What if I Get Audited?
The chances of getting audited are exceptionally low—or, for a traveling nurse who earns less than $100,000 annually, around 0.4%.
That said, it’s not outside of the realm of possibility. To protect yourself, keep track of your expenses and receipts with the assistance of software or an app, such as:
- Trabee Pocket
- Trail Wallet
You should also keep copies of your pay stubs, bank receipts, credit card statements, nurse contracts, and credit card statements.
#2 Should I Keep Paper or Digital Receipts?
Experts across the board suggest keeping both.
#3 Should I Work with a Tax Professional?
Your safest, surest route to a headache-free tax season is to work with a licensed tax professional, such as a CPA, who understands tax prep for travel nurses. However, if you are an experienced travel nurse who has filed taxes before, you may feel comfortable doing it yourself.
Discover Life as a Travel Nurse with MAS Medical
Taxes for travel nurses may seem dizzying for those who are both veterans and new to the process. But with a travel nursing agency on your side, you can find the support you need to work through your taxes, all while exploring the world.
MAS Medical Staffing is one of the top travel nursing agencies in the country. We provide our team of professionals with per diem pay, travel nurse housing assistance, and empathetic support so that you can focus on what’s most important: the quality of your care and the depth and pleasure of your new experiences.
Schedule a consultation with us to find all the new worlds that await.
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