Tax Tips for Travel Nurses and Therapists
The calendar is rapidly approaching everyone’s least favorite time of the year, “Tax Time,” and travel nursing and therapy professionals more than most have to be ready. Tax time can be a challenge for anyone, but with a little bit of preparation even travel nurses can complete their tax returns accurately and on-time. Let’s take a look at some of the most important tax tips for travelers to ensure that filing your returns are a breeze.
Filing extensions can be your friend. Before we dive into the nuts and bolts of filing your tax returns as a travel nurse, it is important to keep in mind one of the tools available to help you, extensions. As a travel nurse or therapy professional, you are out on assignment and may not be in a position to gather and organize all of your tax documents. If you find that the clock is ticking and you don’t have time to give your filing the proper attention, file an extension. An extension is never held against you and will give you more time to organize your filing efforts and maximize your tax benefits.
Determine your tax home. Travelers often receive compensation for transportation, lodging, meals, etc. because they are working away from their tax home. This compensation is typically tax-free because the traveler still incurs costs to maintain their tax home. What is a tax home, you ask? Let’s clear it up.
- Tax Home – Typically referred to as the home you return to on a regular basis and the place where you incur regular, substantial expenses. It is also the place where you probably have your driver’s license, car registration, normal mail delivery, etc. You can substantiate your tax home through mortgage payments, utility payments, and other costs that are paid whether you are physically in the home or not.
- Permanent Residence – If a traveler does not have to bear the costs of a tax home, they probably reside in what is considered a permanent residence. This residence is where the traveler lives, but does not have to pay regular or substantial expenses. For example, if the traveler lives with their parents when not on assignment and isn’t charged rent or upkeep. This living situation is a residence and not a tax home. Therefore, transportation and lodging expenses are not tax-free.
Save every receipt. Travel nurses, like anyone who gets reimbursed for travel expenses, have to find a way to maintain and organize their receipts. From meals, gas, and utilities, to any other expense that a traveler plans to file, having a mechanism to keep them organized is critical to avoiding a tax-time migraine. Some travelers will use a shoe box to save hard copies while others go the technology route and scan every receipt into an app on their smartphone. Whatever way you choose, make sure you stick to it.
Understand state tax responsibilities. Throughout the course of a year, travelers will have worked in multiple states. Each state has a different requirement for paying state income taxes. Some states, such as Alaska, Florida, Nevada, Texas, and a few others have no state income tax. As a traveler, it is important to understand what your responsibility will be for each state where you have earned income.
Save your contracts. Many travelers make the mistake of discarding their travel contract as soon as an assignment has ended. Out with the old and in with the new is a good philosophy for most things. However, your travel contract is not one of them. Save your contracts as they will typically contain important details that are needed when tax-time rolls around.
Your career as a travel nurse or therapist can contribute to having a more complex tax return than most, but the rewards and adventure of life on the road far outweigh the extra paperwork. As long as you keep your records organized, you should have nothing to worry about in April. If you find yourself struggling to pull your records together, contact your recruiter who can always put you in touch with the proper resources to help you get back on track.
Share your tax tips with fellow travelers in the comment section below, or stop by our Facebook page and tell us how you survive tax season.