9 Tax Deductions for Nurses
When it comes time to file your taxes, knowing what tax breaks are available for nurses can make a big difference to taxable income. If you are a contract nurse (also called a travel nurse), you may receive a 1099-Misc rather than a W-2, which may mean you haven’t paid enough federal income tax. With this guide, you can learn more about essential tax breaks for nurses and healthcare workers and tax tips for nursing students.
- Average tax write-offs for nurses include uniforms, medical supplies and equipment, mileage and transportation, meals and lodging, licensing fees, and subscriptions.
- Nurses may also be eligible for more tax deductions like home office costs, the self-employment health insurance deduction, and education credits like the lifetime learning credit.
- Being diligent and thorough with your records and receipts will make filing your taxes easier.
Table of Contents
- Top 9 Nurse Tax Deductions
- Tax Tips for Nurses
- Use FreshBooks To Prepare Your Taxes Easier
- Frequently Asked Questions
Top 9 Nurse Tax Deductions
Employed and contract nurses can take advantage of general deductions and tax credits like student loan interest, dependents, and charitable donations. They can also deduct work-related expenses not already paid for, provided by, or reimbursed by their employer.
1. Uniforms and Work Attire
Work attire and uniforms, including footwear, are considered deductible if required for your job but aren’t suitable for everyday use. You can also deduct the cost of laundering these items. These items are not deductible if paid for or provided by your employer. You cannot deduct laundering costs if your employer offers a laundering service.
2. Education and Training Costs
You may receive tax credits for costs incurred for training and education. These credits include business deductions for work-related education, qualified education expenses, qualifying work-related education, education to maintain or improve skills, or education required by your employer or by law.
If you completed your RN-BSN or worked towards an MSN, you may qualify for an educational credit, tuition and fees deduction, or student loan interest deduction.
Carefully read your employment contract for education details before claiming an expense as a tax-deductible. You cannot deduct the course if you need it to meet the minimum educational requirement for a particular position, but you may qualify for the Lifetime Learning Credit.
3. Medical Supplies and Equipment
Deductions for unreimbursed employee expenses include specialized equipment nurses need to perform the day-to-day activities required for their jobs. Tools like Kelly hemostat forceps, stethoscopes, blood pressure cuffs, blood drawing equipment, personal protective equipment, and tool bags all qualify as deductibles. These expenses must be ordinary and necessary.
4. Mileage and Transportation Expenses
You can deduct mileage and transportation costs outside of your day-to-day travel if you are traveling to see patients or for a work-related event like a conference or educational credit. You cannot deduct the cost of travel to and from your primary workplace. You can use an actual cost deduction method or the standard mileage rate. You do not need to keep receipts for the standard mileage rate deduction, but you do need to track your mileage with a log or app.
You determine your travel deduction based on the percentage of use of your vehicle designated for business, not the hour spent traveling.
5. Home Office Deductions
You can deduct a portion of your home costs if you are required to work from home for part or all of your work week. These itemized deductions include mortgage interest, insurance, utilities, repairs, and depreciation.
To qualify for these deductions, the business portion of your home must be your principal place of business and:
- A place where you meet or deal with patients in the normal course of your business or
- A separate structure used in connection with your business
You cannot have an alternative fixed location, and you must use the office space in your home exclusively and regularly for administrative or management activities of your nursing business.
6. Meals and Lodging
Any unreimbursed travel you undertake for your occupation is tax deductible. This includes:
- Lodging and non-entertainment-related meals
- Travel between your home and your business destination, including air, bus, train, or ferry, and inter-destination costs like taxis
- Mileage for business use of a personal vehicle
- Business calls
- Tips paid for services related to any of these expenses
- Shipping of baggage and work material
- Other ordinary and necessary expenses
To take advantage of these tax benefits, it is recommended you keep all receipts and a detailed log to validate the claim. These logs should include:
- Date, reason, and mileage traveled (if you are using a personal vehicle)
- All receipts related to your travel
7. Licensing and Certification Fees
Nurses and contract nurses can generally deduct annually paid professional membership fees, license and certification fees, and union dues.
Fees and dues for clubs organized for the purpose of social, business, or recreation activities where business is discussed or whose membership in the club benefits your career do not qualify for a deduction.
You may be able to deduct subscriptions to print and online magazines like the AMA, JAMA, and JPN, as well as apps required for your job. If you are a contract nurse and regularly travel to your patients, apps like the FreshBooks Mileage Tracker may also qualify as a deductible.
9. Self-Employed Health Insurance Deduction
Contract (travel) nurses who do not have health insurance from an employer or other source, such as a partner’s health plan, may qualify for the Self-Employed Health Insurance Deduction. As per the IRS rules, one of the following statements must be true:
- You were self-employed with a net profit for the year
- You were a partner with net earnings from self-employment for the year
- You used one of the optional methods on Schedule SE to figure your self-employment net earnings
- You were a more than 2% shareholder and received wages from an S corporation
Other restrictions apply. You can find more information on the IRS website.
Knowing the rules and regulations surrounding the tax deductions available to you as a nurse can seem overwhelming. Learn how FreshBooks can take the pain out of tax preparation with this short video.
Tax Tips for Nurses
We knows you have enough to do day to day without spending time worrying about your tax law. Here are a few tips that can help simplify your tax filing process come tax time:
- Stay organized. Use a digital or hard copy system that helps you keep your receipts organized.
- Keep a record of everything, no matter how small the cost. These things can often add up to big savings at the end of the year.
- Review and confirm. Carefully read each Form W-2, Wage, 1099-Misc, and Tax Statement issued to you for accuracy. Note the amounts as well as your personal information. Contact your payroll department as soon as possible if you notice any discrepancies.
Use FreshBooks To Prepare Your Taxes Easier
Nursing students, nurses, nurse practitioners, and healthcare workers can write off many expenses on their taxes. Now that you better understand what kind of things you can deduct, you can start making the most out of your hard-earned dollars and tax refund this year. Use FreshBooks accounting software to help you track and categorize expenses.
To ensure you get the most out of your federal taxable income, try FreshBooks for free. Sign up today to see how easy tax filing can be!
Understanding the tax laws regarding top tax deductions for nursing students, nurses, and healthcare workers can seem daunting, but it doesn’t have to be. FreshBooks offers guides for many tax deduction topics. Learn more about Small Business Tax Deductions and start getting the most out of your money this tax season.
FAQs about Tax Deductions for Nurses
FreshBooks has summarized some of the frequently asked questions about tax breaks for nurses below. Have a look!
Can nurses write off scrubs for taxes?
Nurses can write off their scrubs for taxes. Scrubs count as uniforms. You can deduct any unreimbursed work clothing as long as you require them for your job and they are not suitable for everyday use. You can even deduct the cost of laundering them.
How can a nurse get the most back from taxes?
Nurses can get the most back from their taxes by submitting claims for all the deductions they are eligible for. To do so, you must keep accurate and diligent records of the expenses related to your job, including license and certification fees and any specialty supplies.
Can home health nurses deduct mileage?
Home health nurses can either deduct the standard mileage rate or the actual costs. If it is your first year as a home health nurse, FreshBooks recommends you keep track of both and submit using whichever method gives you the greater deduction. The FreshBooks Mileage Tracker app helps take the guesswork out of mileage deductions.
Can nurses write off work expenses?
Nurses, nursing students, and healthcare workers can deduct work expenses. These deductions include uniforms, registration and licensing fees, mileage, meals and lodging associated with work-related travel, medical supplies and equipment, and education and training costs.
Can nurses deduct malpractice insurance?
Yes, generally, you can deduct malpractice insurance premiums. Personal liability insurance, also known as medical malpractice insurance, covers personal liability for professional negligence that results in damage or injury to patients or clients. In some states, medical malpractice insurance is a requirement.
How many medical expenses can you write off?
Only deduct the total medical and dental expenses that exceed 7.5% of your adjusted gross income. Include any expenses you incurred and paid for yourself, your spouse, or your dependent when calculating your amount. Deductible expenses include diagnostic fees, acupuncture, alcohol and addiction treatment, eyeglasses, and hearing aids.
Can I write off my car as a travel nurse?
Travel nurses cannot deduct the cost of their car. You can deduct your travel-related expenses, including car rental, lodging, meals, airfare, train fare, and other transportation costs. Your contract often covers some of your expenses but usually has a cap. You can deduct the portion above your cap.
About the author
Sandra Habiger is a Certified Public Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Learn more about her work at http://www.sixfiguresaccounting.com/ .