The first time you file your taxes as a travel nurse can be a bit daunting. Yes, you’ll receive a W-2, but there are also other factors to consider, like taxable vs. non-taxable income, filing taxes in your home state and any additional states where you worked, and other IRS rules.
Here are some basics to get you started on how the travel nursing taxes work, but we strongly recommend you consult a knowledgeable tax professional who can make the process a breeze!
Breaking down your income:
First of all, let’s break down the different types of income you could receive as a traveling nurse:
- Base Salary: This is your standard income type, what you’re probably used to as a staff nurse.
- Tax-Free Money: As a travel nurse, a portion of your compensation is tax-free. It’s a great perk in addition to your base salary (which IS taxable).
- Per Diem: In the travel world, your “per diem” is a daily stipend or rate. It’s usually determined by the General Services Administration (GSA) of the United State Government. They determine what the maximum allowance for certain expenditures, like meals and incidentals, would be for the area you work in while you’re on assignment. Visit GSA.gov to learn more
- Blended Rates: Blended rates are a mixture of both taxable and non-taxable income. When you’re looking at potential agencies, make sure you understand what your per diem will be and what your base salary is. This is part of what goes into your “blended rate.” Every agency does a blended rate differently and it can even vary depending on the contract you negotiate. You recruiter will walk you through your pay step-by-step, be sure to ask questions!
There’s always some fine print somewhere.
Not everyone qualifies for non-taxable income. In order to call yourself a “traveler” and qualify for the government benefits of being a traveling employee, the IRS mandates that you must have a permanent residence in addition to wherever you’re staying while you’re on assignment. Some people call this your “tax home.” In other words, you must pay a mortgage or pay rent, utilities, and other housing bills somewhere else.
TAX TIPS FOR TRAVELERS:
There a few other things you’ll want to keep in mind while you’re traveling that will make filing your taxes a breeze.
Don’t Stick Around Too Long: Be cautious about staying in a single city for too long. As a traveling nurse, working in one city for longer than 12 full months may raise a red flag with our friends at the IRS. Stop by home between assignments or at least once per year. If you stay away too long, it looks like you’ve abandoned your tax home.
Keep Records: As a traveling nurse, you’ll need to keep meticulous records of your time traveling and your expenses. You’ll want to track your mileage, keep all your nursing contracts, and hold onto receipts for uniforms, fuel, utilities, and other work-related costs. If you keep the receipts for all the expenses you want to claim as an exemption, it can make the process go a lot smoother. Even after you’re done filing your taxes, you want to keep those receipts in case you get audited down the road.
File On Time: When you get all your W-2s or other tax documents, schedule out a time to either sit down and complete your taxes or go meet with a professional. You’ll get your refund sooner and you won’t run the risk of forgetting. Many travelers prefer to use a tax professional who has past experience with travel-based employees and is well-versed in the appropriate IRS rules. This will help you improve the size of your return and minimize your risk of being audited.