If you’re a travel nurse, taxes can be one of the most confusing yet important parts of your job. As tax season approaches, understanding the rules and regulations for filing as a travel nurse is essential to ensure you receive all the deductions and credits available to you.
Luckily, we’ve put together a guide on navigating taxes as a travel nurse in 2023 – with information about how to file and prepare for potential audits.
Disclaimer: Fusion Marketplace does not offer professional tax guidance and recommends you consult a certified tax professional for official and personalized tax advice.
How to file taxes as a travel nurse
So how do you get started with your taxes? First, it’s important to understand your taxable income, because it’s not the same as a staffed healthcare employee. Typically, perm staff workers are paid by the hour and most likely, so are you!
However, as a traveler, you may also qualify for non-taxable stipends, otherwise known as per diems, that help cover travel expenses like housing, meals, and other essential costs.
Understanding tax homes
Whether you receive a tax-free stipend depends on your ability to prove that you have a tax home. Tax homes are 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 your family home.”
Unlike your perm home, which is the legal residence where you receive your U.S. mail, register your driver’s license, and register to vote, your tax home is centered around your place of work.
If you spend too much time in any geographical area that’s not your tax home, then the IRS may consider that area your new tax home. To avoid this, make sure you never stay in the same region for more than 12 out of every 24 months, otherwise known as the 12-month rule.
Also note that your tax home radius only extends as far as you can commute to work within a day without needing overnight accommodations.
Stipulations to non-taxable income
To avoid being taxed on your stipends, you need to qualify your tax home. Here’s how:
- Prove you have a tax home if your primary area of residence is also your main area of income; or
- Visit your primary residence at least once every 12 months and provide proof that you pay for the expenses to maintain your perm home
Some ways to prove your tax home is your primary area of residence include:
- Maintain a current driver’s license from your tax home state
- Register to vote in your tax home state
- Register your car in your tax home state
- Maintain a bank account in your tax home state
- Keep documented evidence you stay at your perm residence in your tax home state at least once a year
- Keep records that you maintain your perm home year-round like:
- Mortgage or rent payments
- Utility bills
- Home maintenance expense payments
- House sitter payments
- File your resident tax return in your tax home state
Remember, since this income isn’t taxable, it won’t be reflected in your annual income. This may make it trickier to qualify for a loan.
Travel nurse state taxes
Each state has its own tax laws, and some states require travelers file a non-resident tax return in every state they’ve worked in as well as in their perm tax home state.
If you live in a state that doesn’t assess income tax, like Alaska, Florida, Nevada, South Dakota, Tennessee, Wyoming, or Washington, but you work in another state that does assess income tax, then you need to file as a non-resident in the state(s) you work in.
As far as taxes are concerned, a “non-resident” is an individual who temporarily resided in and/or worked in a state at any time throughout the year, although the state wasn’t their permanent residence.
However, if you’re a resident of a state that assesses income tax and work in another state that also assesses income tax, then you need to file in both your resident state and the state(s) you work(ed) in.
You’ll need to file a non-resident state tax return if you made money from sources in a state where you don’t live, including:
- Wages or income you earned while working in that state
- Out-of-state rental income, gambling winnings, or profits from property sales
- S corporation or partnership income
- Beneficiary income from a trust or estate
- For active-duty military: Non-military income earned outside of your state of legal residence
- If your employer withheld taxes from the wrong state
How to prepare for potential tax audits
As a travel nurse your taxes may be scrutinized more closely, as you’re typically documenting high expenses and low income. This may leave the IRS confused about how you afford your lifestyle.
You can reduce your risk of an audit by consulting a certified tax professional familiar with traveling healthcare workers.
Additionally, keep copies of your important documents and include receipts that show proof of your duplicated living expenses, plus save your work contracts should you ever need them. The statute of limitation can go up to seven years so you’re safe to discard these docs after that timeframe.
As tax season rolls around, look into the best ways for you to file as a travel nurse or on-the-go allied health worker. Now that you know all you need to know about how to file, consult a tax professional and take action to get the best bang for your buck.
