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Travel nurse tax deductions the IRS doesn't want you to know about

Take Advantage of key deductions this tax season

With a little due diligence, you can put more money in your pocket, not Uncle Sam's.

Tax season is upon us.  Most Americans experience some degree of stress in regard to the annual ritual of filing with the IRS, and travel nurses are no exception.  For many, the process is daunting, scary, and even a bit intimidating because a travel nurse may often work in several locations over the course of one year.  Meals, travel, housing, and other work-related expenses are often sources of confusion when it’s time to file—but it doesn’t have to be that way.

“Some travel nurses may not be aware that there are numerous tax breaks associated with this career choice,” says Tera Tuten, director of operations for NurseJungle.com.  “It can be extremely time-consuming to read IRS documents and decipher what applies and what doesn’t, and fortunately, we’re in a position to help our travelers by doing their homework for them.”

If you’re feeling overwhelmed, fear not.  Relax.  Take a deep breath, and join us as we walk through some very simple guidelines that will make your tax prep a snap.  More importantly, we’ll cover some deductions that can save you a bundle on this year’s tax return and put more money in your pocket, not Uncle Sam’s!

First, in order to take advantage of all those money-saving deductions, you’ll need to meet two conditions:

1.  Your Tax Home

A tax home is simply defined as the place where you reside for the majority of the year.  This is your permanent residence—the home you return to between assignments.  This is the residence that produces significant and recurring expenses, such as a mortgage or rent payment.  By determining your tax home, you are setting up the groundwork for travel deductions because you can show that you are often leaving your permanent residence to travel to another location to work for an extended period of time.  To show proof of your tax residence, it’s important to remember to:

  • Maintain your driver’s license and car registration in your tax home state;
  • Be a registered voter in your tax state;
  • Maintain proof of your residence, such as mortgage documents and/or rent receipts;
  • Return to your tax home at least once each year and file a tax return in your home state.

What if I don’t have a permanent residence?  If you travel so much that you do not have a permanent residence (your housing at each assignment becomes your permanent residence), you are ineligible for travel deductions because, by IRS definition, you are a transient and aren’t truly traveling.

2.  What is “Temporary”?

Temporary, according to the IRS, is anything less than 12 months.  If you worked in one assignment during the entire previous calendar year, you are not eligible for IRS deductions.

Once you’ve determined your tax home and have determined your travel nursing assignments were indeed temporary, it’s time to take advantage of the many deductions available for you.

So Many Travel Deductions
To accurately determine the total amount of your deductions, this is when it’s extremely valuable to save your receipts for expenses for the following items:

  • Transportation Costs—plane, train, boat and bus fare as well as driving expenses to your assignment, including car maintenance.  Tolls and parking count, too.  Travel by taxi from airport or station to your temporary housing is also deductible.  If you rent a car, your work-related travel in that car is deductible;
  • Housing and Meals—all meals, beverages, and associated taxes are fair game;
  • Cleaning—dry cleaning and laundry costs related to your assignment;
  • Telephone Expenses—related to your assignment, including mobile phone expenses;
  • Internet and Computer Expenses—Internet access and computer maintenance;
  • License Fees and Continuing Education Costs;
  • Malpractice Insurance;
  • Uniform Costs;
  • Job Search Costs;
  • Tips—any tips paid in connection with any of these costs are deductible.

Indeed, travel nursing brings tremendous tax benefits that can make a huge difference on your tax return.  Don’t get too excited yet, though. Keep in mind that there are some key responsibilities and duties that come with all of these deductions.

Assignments in Multiple States = Many (Not So) Happy Returns
Because travel nurses typically work in multiple states over the course of a calendar year, multiple state returns must be files in accordance with each individual state’s laws and regulations.  Note that different states have different filing deadlines for state returns, and be sure to file on time in each state.

Some states have reciprocal agreements, meaning that you can receive credit in one state for paying taxes in another state.  It’s important to check into the state tax laws in each state in which you worked.  As for your home state, you’ll more than likely pay state taxes (if applicable), even if you only spent a few weeks there.

Don’t be afraid to contact your staffing company if you need help navigating the state tax laws.  “Any good, reputable staffing company will help its member travelers by locating the necessary information or directing the traveler to the best resources,” Ms. Tuten adds.

Hold On to Those Contracts
Too many travelers make the mistake of disposing of their contracts.  They logically think, “Assignment’s over; so is the contract” and it ends up in the shredder.  The contract, however, contains vital details that can make the tax process much easier, and this is especially important if you’ve worked for more than one staffing company in the previous year.  Not all staffing contracts are equal, as some companies offer per diem rates while others do not.  Some companies report your per diem income to the IRS.  For those that don’t report, you have an opportunity to report your expenses and take your deductions.  Contact your staffing company(ies) for assistance with per diem rates and guidelines. 

Tax season can be a stressful time, and in regard to the unique lifestyle of a travel nurse, tax prep can be daunting and a bit tricky, but it doesn’t have to be.  By enlisting the help of your staffing company and organizing your records, you can take advantage of travel deductions that will save you a bundle and ensure your travel nursing career continues to be safe, fun, and successful.

This message has been brought to you by NurseJungle.com, the leading online career authority for nursing professionals.  See how NurseJungle.com can help you build your successful nursing career by searching our jobs now.