Disclaimer: We’re not accountants or lawyers and the information provided here is based on a layperson’s perspective on travel nursing taxes. For tax advice, please consult an accountant, like the experts at TravelTax.com.
May you never have to endure the arduous process of an IRS audit. It’s like getting blood drawn: no one’s favorite activity. And while audits can affect (or afflict) less than 1% of the population, unfortunately, it is true that travel nurses can have a higher chance of getting audited. Here are some reasons why:
- Generally speaking, the nature of your work and how you make money doesn’t fit nicely into a normal tax box, so the system wants to double check that you’re being a good and honest citizen. (Apparently, just being a nurse isn’t proof enough.)
- The IRS wants to see about your unreimbursed expenses. This is one of the most common reasons for being selected. Due to the nature of travel nursing, your expenses compared to your income can look suspicious, even if there’s no funny business.
- Your agency is audited and the IRS is checking out all employees.
- Your taxable wages are low enough that the IRS took notice.
- You have a lot of deductions.
- Plain old bad luck. Some audits are random.
The purpose of an audit is to prove to the IRS that you earned what you claimed and that your deductions were legitimate. But if you’ve stayed on top of your finances and tax info, your audit could hurt less than last year’s flu shot.
Also, keep in mind that almost all individual audits are resolved through the mail, without having to deal with an agent.
Here’s what you can do to prepare for the day you hope never arrives.
- Remain calm! The first thing to know is that you will get through this, like many other people have. And when the IRS re-checks your documentation, it may have been their mistake. If it’s yours, however, you do have to pay the difference plus any fees that may have incurred.
- Get your docs in a row! Remember that you can be audited for a return you filed two or three years ago. The rule of thumb is to keep your records for seven years before tossing them. You’ll want copies of things like credit card statements, bank receipts, contracts, pay stubs, and mileage logs.
- Know your rights! For example, you can reconstruct lost records. You also are under no obligation to provide extra info — you only need to give what’s required. And, you can always hold your audit offsite in a neutral area.
- Do your homework! If that questionable line item on your return is legit according to tax law, be ready to prove your case to your agent.
- You can delay your audit! Note: this does not mean ignore it — you have to request your delay. This can buy you time to return to your permanent home or to collect documentation that may be from many cities ago. But if you’re following Step 2, you should be good to go.
- Call in the professionals who deal specifically with travel nurse taxes. You don’t have to go it alone.
And that’s it. Comply with all IRS requests, save your documents, and appeal your case if you don’t like the results. Do these things, and you’ll be calling a Code Clear on your audit in no time.
Did you get audited and live to tell about it? Tell us your survival tips in the comments below, and be sure to check out our entire travel nurse tax series.