Travel Nurse Tax Guide 2023
Navigating travel nurse taxes can be a challenge, especially because travel nurse tax amounts can be a bit different depending on what state or states you worked in. In general, however, taxes are very different for travel nurses compared to traditional staff nurses. From choosing a tax home to keeping your receipts to knowing exactly how your income will affect your long-term financial goals, here is the information you need to know about travel nurse taxes.
RN’s can earn up to $2,300 per week as a travel nurse. Speak to a recruiter today!
Travel Nurse Taxes + Income Breakdown
Travel nurses are paid differently than staff nurses because they receive both a base hourly pay that is taxed and additional “payments” that are non-taxed to make up their “total” pay. When you sign up to commit to a travel nurse position you’ll receive a pay package that will detail all of the different aspects of what will make up your actual compensation.
Essentially it’s in the travel nursing agency’s best interest to keep the base rate of a travel nurse’s pay package low, so many travel nurses have a modest base pay but will receive additional stipends. In a technical and legal sense, those additional stipends — which typically cover things like meals, housing, and work-related expenses — are expense reimbursements for doing your job as a travel nurse, which is why they aren’t considered income and are non-taxable.
Travel agencies offer “standardized” bill rates. This means that there is one rate for all workers with any given license covered by the contract. For example, all Registered Nurses have the same bill rate, all Physical Therapists have the same bill rate, and so on. It’s also possible for the licenses to be broken down by specialty and every so often by level of experience. For example, Medical Surgical and Telemetry Registered Nurses have one rate while all other Registered Nurses have another. Registered Nurses with 1-3 years of experience get one rate, while those with more than 3 years of experience get a slightly higher rate. The important thing to understand is that standardized bill rates are set in stone by the contract for all intents and purposes. There is no possibility of negotiating a higher bill rate based on a particular travel nurse’s salary history or work experience.
Joseph Smith, EA/MS Tax, an international “taxation master” and founder of Travel Tax, explains that in addition to their base pay, most travel nurses can reasonably expect to see $20,000-$30,000 of non-tax reimbursement payments in a typical year working as a travel nurse.
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Qualifying For Non-Taxable Income
In order to avoid being taxed on those reimbursement payments, however, you need to clearly prove that you have what’s called a “tax home” to the IRS. The IRS defines a tax home as “the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home.”
Smith explains that you can qualify for a tax home in two main ways:
- If your primary area of residence is also your main area of income, which typically does not apply to travel nurses.
- You visit your primary residence at least once every 12 months and can prove that you are paying for expenses to maintain your primary home.
If you can’t prove that you have a tax home, or don’t meet the qualifications for having a tax home, you will be taxed on the stipend payments you receive as part of your travel nurse pay package. Additionally, Smith cautions that most travel nursing agencies will not verify that you qualify for a tax home, so it’s up to you, the travel nurse, to ensure that you are meeting all requirements for establishing a tax home in order to collect your non-taxable stipends.
Joseph Smith, EA/MS Tax, an international “taxation master” and founder of Travel Tax, explains that in addition to their base pay, most travel nurses can reasonably expect to see $20,000-$30,000 of non-tax reimbursement payments in a typical year working as a travel nurse.
While many people commonly believe that you must have your tax home at least 50 miles away from where you work as a travel nurse, there’s actually no specific distance requirement. The only real requirement is that you must prove that it’s farther away than a reasonable commute and requires rest and sleep before going back and forth.
You should always check with a tax professional, but in general, travel nurses can take the following steps to help ensure that they qualify for a tax home in the eyes of the IRS:
- Keep proof of any payments you are making to show that someone else is maintaining your primary residence, such as receipts for a house sitter, mortgage, rent, utilities, or home maintenance expenses.
- Maintain your driver’s license and voter registration in your home state.
- Keep your car registered in your home state.
- Keep a per-diem position, if possible, in your home state.
- Return to your permanent home at least once every 13 months.
- File a Residence Tax Return with your home state.
To file taxes correctly, it’s very important to maintain your tax home and prove that you have to actually pay for “double” of everything—for both your tax home and your new living situation as a travel nurse. That means that if you rent out your home temporarily while you’re gone, you no longer can classify it as a tax home.
What About State Taxes?
Travel nurses should plan on filing their taxes by the April 15th deadline, just like everyone else in the United States, although there may be a little wiggle room for extensions due to the nature of being a multi-state professional as a travel nurse, according to Smith. Every state has different laws for filing taxes, but travel nurses may need to file a non-resident tax return in every state they have worked in, as well as the state that they consider their permanent tax home.
Travel Nurse Tax Tips
Smith advises travel nurses to keep a receipt book to help them make tax preparation a little easier by having all of their paperwork in one place. Although digital receipts may be more convenient or “modern” for younger nurses, keeping paper copies as a backup is always recommended. Your receipts can include things like:
- Housing and lodging expenses while traveling
- Mileage travel
- Uniform and scrub expenses
- Utilities
- Work-related expenses, such as continuing education courses or certifications you must maintain to keep your position
- Meals
- Costs for Internet and phone providers
The 2022 tax reform laws did away with many job expenses at the federal level, which means that travel nurses can’t deduct certain travel-related expenses such as food, mileage, and gas on their federal return. You can still get a stipend or reimbursement from your travel agency for those expenses, but they may not count as deductions.
That being said, a handful of states still allow job expense deductions on your state tax return, such as New York, California, Alabama, Hawaii, and Arkansas, so there may be additional tax deductions you can make if you’ve worked in a qualifying state.
Smith also adds to be careful when filling out residency on your tax return, as he sees many travel nurses make the mistake that working a travel assignment means they have moved. However, working a temporary (under 12 months) travel nursing position does not qualify as a move of your permanent residence — instead, they are just away from home temporarily and that’s an important distinction to make come tax time.
Keep your tax home as a permanent residence address, and don’t change it unless you actually move permanently!
Can You Get Audited As A Travel Nurse?
The travel nursing industry as a whole does tend to be scrutinized closely, says Smith. As a travel nurse, you may be more at risk for an audit if you’re displaying high expenses and low income. For instance, if your mortgage is $10,000 a month, but your overall income with your base pay as a travel nurse is only $20,000 annually, the IRS may be puzzled as to how you’re actually affording your lifestyle.
You can reduce your risk of an audit, or increase your risk of getting through an audit favorably by always making sure to work with a certified tax professional who is familiar with traveling healthcare professionals and not solely relying on your nurse recruiter or travel staffing agency for tax advice.
Lower Taxable Income Considerations
One of the appeals of travel nursing is that you have the potential to make a high income, especially through non-taxed stipends. And although at first glance, having non-tax stipends for things like housing may sound like a great deal for you as a travel nurse, it does come with a catch: because the additional stipends you receive as a travel nurse are not taxed, they are not considered income, and as such, will not be reflected in your annual income.
That may not sound like that big of a deal unless you find yourself in need of a loan, mortgage, or disability payment, or are nearing the age to collect Social Security. All of the aforementioned items are calculated based on your income. The lower your income, the lower the loan amount you will qualify for, and the less you are contributing to Social Security and therefore will be eligible to collect when you’re ready for retirement.
If you know that you will be needing a loan or a mortgage in the near future, Smith suggests talking to your lender as far in advance as possible to explain your situation and plan ahead. Working with a lender who is familiar with the pay structure for travel nurses can also be helpful.
In some circumstances, such as for nurses who are nearing Social Security’s retirement age, it may also be helpful to legally declare that you don’t have a tax home on your tax return, and instead, pay taxes on all of your stipends, so you can count it as taxable income.
And remember – you should use this guide as information to help you learn more about filing taxes as a travel nurse but remember that it is not tax advice. You should always consult your own CPA or tax professional before filing your tax return.
RN’s can earn up to $2,300 per week as a travel nurse. Speak to a recruiter today!
Travel Nurse Tax FAQs
Do travel nurses pay taxes?
Yes, all travel nurses must pay taxes on all income that they earned. They will need to file a tax return for every state that they worked in, as well as their home state where they have permanent residence.
How do travel nurses pay taxes?
If possible, it’s always beneficial to work with a tax professional, such as a Certified Public Accountant who can help you file and pay taxes that you owe as a travel nurse. An accountant can provide you with the physical paperwork that you can use to mail your tax payment in or help you set up an online account if digital payments are acceptable.
If you file your own taxes using TurboTax or another software, you will be provided with the exact mailing address and instructions to submit payment. If you don’t have one already, you may need a book of checks in order to pay your taxes.
The most important thing you need to know about paying taxes as a travel nurse is that you will need to both pay taxes and file a tax return in every single state you have worked in. If you’ve worked in many different states, that’s where hiring a CPA can be very helpful to help you navigate all that paperwork and payment.
Do you get taxed twice as a travel nurse?
It depends. American Traveler explains that you may end up paying taxes in every state you worked in as a travel nurse, depending on which states those are. Some states have what’s called a “reciprocity” agreement, which means that they have agreed that travel nurses working in those states will only be responsible for paying taxes to one state in total. You will have to check with your accountant or look into the tax rules for each state that you’ve worked in to determine exactly how much you owe in taxes. You should also check with your travel nursing agency if this is your situation because you will most likely need to file tax exemption paperwork through them as well.
You will also need to pay taxes in both your home state and any state you worked in. That means that all income you make will be ultimately taxed through your home state taxes as well as the state where you earned the money. That might look like getting taxed twice, but the good news is, your home state will deduct the difference if the percentage rate of your home state is higher. And if it’s the other way around, you will generally only pay the higher state rate. This can get a little confusing, which is why we recommend hiring a tax professional.
What about states without income tax?
Some states do not have an income tax, including Alaska, Washington, Wyoming, Nevada, South Dakota, Tennessee, Texas, Florida, New Hampshire, USVI, and the District of Columbia (if you don’t live there.) If you live in one of these states, you will still need to pay any set income tax rate in the state where you work.
If you don’t live in those states but you do work in those states, you will still pay your home state tax rate, so be sure you keep that in mind with your total earnings so you can have enough to pay your taxes come tax time.
What can I write off as a travel nurse?
This depends on if you’re considered a W2 employee or a 1099 contractor, but in general, travel nurses may be able to deduct the following expenses:
– Mileage or the cost of gas
– A rental car
– Uniform and equipment costs
– Continuing education
– Licensing fees
– Travel expenses
– Some meals
– Retirement and insurance contributions
– Expenses that go into paying for your tax home
