Careers in travel nursing are unique and often unpredictable. While many nurses are drawn to this work for these very reasons, the out-of-the-box nature of traveling can sometimes cause additional tension at tax time. Not to worry! As travel nurses contend with income from sources spread across the country, a minimal amount of preparation will help navigate the tax season with ease…and the following insights and tax tips for travel nurses are a great place to start:
Since most travel nurses have their mail forwarded, many will not file their tax returns in the first months of the tax filing season but toward the middle of March. Never be afraid to file for an extension! Not only will you have a clearer head, so will your tax professional. In fact, your tax preparer may be able to do more for you since he or she does not have a deadline to contend with.
In addition to the IRS, many travelers must deal with multiple state tax agencies. The very nature of travel work means that you could end up working in multiple states during a singular tax year. Be mindful that each state has their own tax policies mostly independent from the IRS, and they are usually very vigilant when it comes to protecting their tax revenues.
No matter the number of states you work in, you only need to file in your state of residence—even if your income was not earned in that state. To ascertain this, state tax authorities often cross reference other legal documents. For example, a state may scan a database from the department of motor vehicles and match all active drivers’ licenses with filed returns. Some states even go so far as to cross-reference mailing addresses for W2s.
Keep in mind that whenever a travel healthcare professional works in multiple states, the home state will tax worldwide income but allow a credit for taxes paid to other states. For this credit to be granted, the home state will require proof that these taxes were paid.
For a travel nurse to receive transportation, lodging, and meal allowances on a tax-free basis, they must be working away from their tax home. A tax home often gets confused with what is more commonly known as a permanent residence, but these are actually two different things (although they are usually the same location for non-travelers). Confused? Read on and we’ll make everything clear.
A permanent residence is the location of the individual’s legal residence, with legal ties such as a driver’s license, car registration, voter interest rate, professional practice licenses, and other memberships or associations that are confined to a particular area. A permanent residence is also the state in which the individual will normally file their resident tax return regardless of the location of their tax residence.
By contrast, a tax residence is more of a concept than a physical place. It’s a point of reference to determine from what location an individual has deductible/reimbursable travel expenses. To put it in simpler terms, a tax residence is where an individual derives the majority of their income. It is where they work not where they live.
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Tax Tips for Travel Nurses — © 2013. AMN Healthcare, Inc. All Rights Reserved.
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