Don’t wait until March to get your finances in order for tax day. Here are 3 travel nursing tax hacks to get you prepared — before April.
1. Get organized.
Set up an organizational system that helps you save all your documents throughout the year. As you move from assignment to assignment, your system should easily move with you.
What to save:
- Contracts for each of your assignments. In our interview with travel nurse tax expert Joseph Smith, his #1 tip for travel nurses was to save their contracts. “Keep all your travel nursing contracts. This is non-negotiable. They provide you much of the necessary information you and your accountant need to properly complete your tax return.”
- All your paystubs. Similar to your contracts, your paystubs will have valuable information that can be used to file your taxes — or if you ever get audited (knock on wood that never happens).
- Receipts for anything you may be able to claim as a deduction. If you’re stumped on what may be deductible, err on the side of keeping them. It’s helpful to annotate your receipts and keep them organized by assignment.
2. Get clear on your tax home.
Smith says that travel nurses often struggle to define their tax home. The tax home is really the cornerstone of a successful tax return — all the tax-free aspects of your pay package are contingent on having a proper tax home. Without a tax home, all of your income is taxable.
Here’s how to make sure you have a tax home:
- Remember that your tax home is not the same as your residence. It refers to the geographic location where you do the majority of your work in a tax year.
- You must meet two of the three requirements of a tax home:
- Have regular business/employment in your tax home.
- Maintain a permanent residence in your tax home (remember: the tax area, not the physical home) by paying for rent or mortgage, utilities, etc.
- Have not abandoned your tax home.
- Don’t be afraid to ask for help. Consult a tax professional, like Joseph Smith at Travel Tax.
3. Know your laws.
Starting in 2018, the laws affecting healthcare travelers changed drastically. It’s important to keep up-to-date on changes like these so that you can make the best decisions for your finances.
One of the most important changes, for example, is that transportation, meals, lodging, seminars, licenses, uniforms, shipping, rental cars are no longer deductible in excess of reimbursements. This has been replaced by standard deductions: $12,000 for individuals and $24,000 for traveling couples.
Looking at state laws can also give you a handle on what you may owe — or the size of the return you can expect. It may even influence your decision about which states to visit going forward.
Another benefit to researching individual states is that it will give you a snapshot of how complex your situation may be — if you’ve traveled to a few states with complex regulations, you may want to hire a professional to help you with your taxes.
For professional travel nursing tax information, check out Joseph Smith’s Travel Tax.
Worried about an audit? Check out our article on how to sail through an IRS audit.