5 Tax Deductions for Travel Nurses You Should Know
Travel nursing presents valuable opportunities and challenges while working in and exploring new areas, but navigating your taxes can also present a few challenges. Although travel nurses often qualify for stipends and tax deductions, it takes some understanding and strategizing to maximize your savings and income.
To get the most from your tax filing as a travel nurse, check out FreshBooks’ guide to travel tax deductions and tax home rules as well as tips for filing.
- Travel nurses are eligible for tax deductions, reimbursements, and stipends for expenses necessary for their profession.
- To claim stipends and reimbursements, travel nurses must work outside of their validated tax home and demonstrate eligible expenses.
- Rules for state taxes vary, but you may have to file and pay taxes for multiple states.
Table of Contents:
- 5 Travel Nurse Tax Deductions
- What is a Travel Nurse Tax Home?
- Travel Nurse Tax Rules for State Taxes
- 6 Tax Tips for Travel Nurses
- Frequently Asked Questions
5 Travel Nurse Tax Deductions
Travel nurses have plenty of stressful responsibilities but can take advantage of a number of handy tax breaks and deductions.
1. Travel Reimbursements
As a travel nurse who leaves their home for temporary nursing contracts, you can claim your related out-of-pocket travel expenses for tax-free reimbursements. This can include transportation, such as planes and car rentals, as well as lodging expenses and meals. If you’re driving, make sure to meticulously keep track of your mileage to get fuel cost reimbursements later on.
2. Professional Expenses
When you file your travel nurse taxes, you can deduct certain professional expenses from your taxable income under the condition that they’re common and necessary for performing your job duties.
These expenses may include:
- Nursing malpractice insurance to protect you from lawsuits
- Membership fees or dues for professional nursing organizations and associations
- Office supplies for work, such as pens, binders, staplers, or anything else you may need
- Costs for nursing uniforms that are required on the job, as well as dry cleaning expenses
3. Medical Supplies and Equipment
Many travel nurses are expected to purchase and supply their own equipment while on the job. If your employer or contract doesn’t reimburse those expenses, you can deduct costs for medical supplies and equipment from your taxes.
Common tax-deductible medical supplies and equipment include:
- Nursing shoes
- Personal protective equipment
- Medical watches
- Nursing scissors and tape
4. Stipends for Housing, Meals, and Incidentals
Many nurses can take advantage of travel nurse stipends, which is tax-free money meant to cover travel nurse living expenses. These stipends cover living expenses, such as transportation, housing, and meals while working away from your regular tax home or a place of residence. That means that you’re paying housing expenses at your permanent home while also paying expenses wherever your contract is based.
5. Education and Licensing Fees
Education and licensing for travel nurses is an ongoing responsibility, and you can claim these expenses each year on your taxes. You can deduct state-mandated continuing education programs, including related tuition, books, and supplies if they’re required to maintain or upgrade your current nursing qualification.
Other forms of continuing education and professional development may also qualify for tax breaks, such as conferences, in-person or online classes, and self-directed study materials.
Travel nurses do some of the toughest work out there, but filing taxes shouldn’t be your most complicated task. Check out the video below to learn how FreshBooks can make tax preparation a stress-free process.
What is a Travel Nurse Tax Home?
The IRS defines a travel nurse tax home as the general area of your main place of business or employment, regardless of where your permanent home is. Having a primary place of residence in your declared tax home is necessary if you want to take advantage of travel nurse tax deductions.
To qualify for a tax home, you can demonstrate that you visit your primary residence once every 12 months and you maintain its expenses. To provide evidence that you haven’t abandoned your residence in your tax home, you can:
- Keep proof of rent, utility bills, and mortgage payments
- Maintain a driver’s license in your tax home state
- Return for at least 30 days every 12 months
Travel Nurse Tax Rules for State Taxes
One of the major benefits of working as a travel nurse is the opportunity to spend extended periods living and working away from your home state. However, working in multiple states can mean you’re subject to multiple state tax rules, and you’ll usually have to file a state return for each state you worked in as well as the state of your tax home.
In this case, you’ll usually have to file a non-resident return for the states you work in. Certain states offer residents credits to offset taxes paid to other states.
If you stayed in a state for 183 days, the state considers you a resident, even if you maintain a residence in your home state. There are a few ways to avoid being taxed on your total income across multiple states, such as establishing another domicile or taking advantage of reciprocity agreements between states.
Certain states don’t have an income tax, which helps avoid paying taxes in multiple states if you can establish a nursing contract there. These states include:
- New Hampshire
- South Dakota
6 Tax Tips for Travel Nurses
1. Hire a Tax Professional
Tax preparation for travel nurses can quickly get complicated, and it’s important to manage your tax obligations to maximize your deductions and earnings. A tax professional who is experienced working with travel nurses can provide authoritative and expert tax advice.
2. Consult Prior to Signing
If you’re working with a tax professional, get their opinion on each contract before you sign. They can help evaluate tax implications and deductions and suggest negotiated contract terms.
3. Understand Your Contract
Read and analyze your contract from top to bottom, and clarify any questions or concerns you may have with your recruiter. Don’t accept verbal promises as confirmed contract agreements—always get them in writing.
4. Maintaining Proper Documentation
The IRS is stringent about claiming tax deductions and stipends, and as such requires proof of duplicated expenses, income, and receipts. Keeping your documents current and organized and help you with tax preparation and audits. A designated bank account for your expenses can make it easier to itemize deductions.
5. Limit Contracts to 12 Months
Don’t work in one location for more than 12 months over a 24-month period, and make sure to return to your tax home once per year for at least 30 days. Make sure your contracts allow you to manage your time in each location to maintain your tax home.
6. State-Specific Considerations
If you’re working in different states, research each tax code and understand how they affect your tax circumstances and obligations.
Make Your Tax Preparation Easier with FreshBooks
Travel nurses can take advantage of tax breaks, stipends, and other benefits that come with a rewarding and exciting career, and getting the most from your tax filing just takes a little strategization and organization.
With FreshBooks accounting software, travel nurses can feel at ease with their tax returns as they do with taking their patients’ vitals. FreshBooks can help you track and categorize all your professional and travel expenses, enabling you to maximize your tax deductions, savings, and income as a travel nurse. Even when tax season seems far away, it’s never too early to get your finances and documents organized. Try FreshBooks free to get started.
FAQs About Tax Deductions for Travel Nurses
Whether you’re new to working as a travel nurse or have already worked in and traveled to many places, tax deductions always prompt a few common questions.
Can a travel nurse write off a camper?
To qualify for reimbursements or stipends for housing, you must have a tax home housing expense and a duplicate expense for where you work. If you live in an RV or camper, you won’t write off the camper but instead the spot you rent for it.
Do travel nurses get audited by the IRS?
The IRS is more likely to audit travel nurses over regular workers. This is largely to verify the amount of reimbursed expenses and stipends that nurses claim in their return. Demonstrating high expenses and low income can prompt an audit.
How do travel nurses reduce their taxes?
Travel nurses can qualify for stipends, which are a type of non-taxable income. Tax deductions and working in a state with no income tax can also help lower your tax bill.
Do travel nurses get W-2s or 1099?
Travel nurses receive a W-2 if they’re an employee of a healthcare staffing company, or they receive a 1099 if they work as an independent contractor.
Do you get taxed twice as a travel nurse?
If you work in multiple states as a travel nurse, your entire income may be subject to multiple state taxes.
Can you write off your car as a travel nurse?
If you have to drive for work, such as to see patients or pick up supplies, you can write off car-related expenses incurred for business purposes.
Are travel nurses eligible for tax credits?
Travel nurses are eligible for certain tax deductions, but they don’t receive tax credits for their profession.
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/ .