I think we can all agree that taxes can be hard to tackle. Between the different state laws and multiple W-2s, med travelers really don’t have an easy way to understand their annual taxes. That’s why we created this handy dandy tax guide for travel nurses and allied medical travelers! Here are all the answers to your questions.
A Tax Guide for Medical Travelers
How does my taxable income differ as a med traveler?
Just like the rest of us, travel nurses and allied medical workers have to file their taxes every year by April 15th. Unlike most permanently staffed employees, travel nurses and allied med professionals have two parts to their compensation: A taxable base pay and additional income in the form of non-taxable stipends.
Usually, perm staff workers receive a set hourly base pay that can be taxed. And while that’s probably the case for you as well, you also may qualify for non-taxable income like traveler stipends. These professional traveler stipends are known as per diems and are to help reduce duplicate expenses accrued during your travel job like the cost of housing, meals, and other essential expenses. Set by the U.S. General Services Agency (GSA), per diem rates are based on the location of your work assignment, so areas with a higher cost of living may allow for more generous stipends.
Of course, it’s not quite that simple. In order to qualify for these non-taxable stipends, you have to maintain a tax home. What the heck is a tax home? Let’s talk about it.
What’s the big deal with a tax home?
So, what’s up with this tax home thing? Isn’t that where I live? Well, yes and no.
Your “tax home” is defined by the IRS as “the entire city or general area where your main place of business or work is located, regardless of where you maintain a family home.” Your tax home is centered around your place of work and extends to as far as you can commute back to your perm home without overnight accommodations. Your perm home is your legal residence where you receive your U.S. mail, register to vote, and register your driver’s license/state ID.
For example, if you live in New York City and accept a job in Brooklyn, that falls under your tax home radius because you can drive to work and back without needing an overnight stay. However, if you live in New York City and accept a job in Chicago, you will need temporary lodging, so that falls outside of your tax home radius. Make sense?
There are two ways you can qualify your tax home and they are:
1) To prove your primary area of residence is also your main area of income
2) Or more common for medical travelers, visit your primary residence at least once every 12 months and provide proof that you pay for the expenses to maintain your permanent home
Oh, but the fun doesn’t stop there. Once you’ve qualified your tax home, you must prove to the IRS that it exists. When the IRS says, “Prove it,” you can do that by:
- Maintaining a current driver’s license from your tax home state
- Registering to vote in your tax home state
- Registering your car in your tax home state
- Maintaining a bank account in your tax home state
- Filing your resident tax return in your tax home state
- Keeping records that you maintain your perm home, like Mortgage or rent payments, Utility bills, Home maintenance expense payments, House sitter payments
One of the major perks of being a travel nurse or allied medical traveler is the extra cash that comes with it, thanks to those tax-free stipends. If you want to claim your reimbursements without claiming them on taxes, maintain a tax home, and be ready to show it off if the IRS asks.
What’s the 4-1-1 on med traveler taxes?
Here’s the thing about state taxes: They differ depending on the location. Every state has their own tax laws, so how you file your state taxes is completely dependent on where you live and work.
For example, if you live in a state that doesn’t assess income tax, but work in another state that does recognize income tax, then you’ll need to file a non-resident return in the state(s) you worked in. “Non-resident” is the operative phrase and just means that you’ve worked in a state that wasn’t your perm home state.
On the other hand, if you live in a state that assesses income tax and then work in another state that also assesses income state, you’ll need to file a resident tax return in the state where you live, and non-resident returns in the state(s) where you worked.
How can I simplify my taxes?
It can be a headache to file taxes at the beginning of each new year. Make the whole process on yourself and save your receipts and important documents throughout the year. It’s helpful to hold onto things like:
- Housing and lodging expenses while on a travel assignment
- Mileage to and from travel placements
- Scrubs and other uniform expenses
- Continuing education units (CEUs)
- Medical certifications
- Meals while on an assignment
- Copies of your travel contracts
If your taxes were to be flagged for whatever reason, having these important items from the past couple years will help make the tax process a breeze. Pro tip: Save digital copies of these docs and save them on your personal computer or in the “Cloud,” as the kids say.
The best way to simplify your taxes is to consult a professional tax adviser. Reach out to a tax consultant for professional financial tax advice.
As a travel nurse or allied medical traveler, you have a job unlike anyone else’s. And that means the way you file taxes is equally as unique as the job itself. Tax season is right around the corner, so as it approaches, make sure you look over this helpful tax guide, and consult your friendly neighborhood tax adviser.
*Disclaimer: Fusion Medical Staffing does not offer professional tax help and recommends you consult a certified tax professional for official tax advice.