Travel Nursing and Taxes April 2022

Travel Nursing and Taxes April 2022

That’s right, friends, it’s that time of year again. April showers will bring May flowers, but before May flowers bloom, your taxes are due. This year the tax deadline is Monday, April 18. While taxes, in general, are a complicated system of rules, deductions, and credits, for everyone, it can get particularly tricky for travel nurses. Here, we’re going to walk you through some basic information that’s important regarding your tax status and clear up some common points of confusion.

What Kind of Employee Are You?

When we ask this question in the realm of taxes, the pertinent information we’re looking for here is whether you’re a W-2 employee or a 1099 independent contractor. (Some of you may be both.) This question can be answered relatively easily by simply looking at the tax document you received from your travel nursing agency.

If you received a W-2, that means you are a payroll employee, which implies that the agency withheld payroll taxes (social security, Medicare, and income taxes) from your earnings throughout the calendar year.

If you received 1099, that means you worked as an independent contractor, which signifies that no taxes whatsoever were withheld from your earnings and you’ll be expected to make those tax contributions in a lump sum with your tax return. For more information about the taxes that you’ll need to pay for 1099 earnings, the IRS provides a breakdown here.

It’s entirely possible that you received both, many travel nurses also pick up per diem shifts in between travel contracts for extra income. While most (but not all) travel nurses earn as W-2 employees, typically per diem nurses earn as independent contractors.

I Worked Per Diem but Didn’t Receive a 1099

If you worked some PRN shifts throughout the year between travel contracts but didn’t receive a 1099, don’t sweat just yet. When you earn less than $600 in a calendar year from independent contractor work, many companies won’t issue a 1099 form. Nevertheless, you need to dig out your pay slips for those PRN hours. If you earned more than $400 over the year, U.S. tax law obligates you to report the income.

What is My Tax Home and Why is it Important?

Odds are high that when you first explored the option of travel nursing you heard rumors referring to the various tax benefits of the job. Have you been saving receipts for work-related expenses to claim? Did your recruiter tell you that your travel reimbursements and housing stipends are non-taxable?

Ultimately, to classify your work stipends and reimbursements as non-taxable the IRS requires that you maintain a ‘tax home‘. Your tax home cannot be a P.O. box; it must be a residence that you retain regardless of where your work contracts take you throughout the year.

If you do not have a tax home, choosing instead to stay with family, or friends, or simply move from one contract to the next then you are classified as an itinerant or transient worker. Under this classification, all of your income is taxable. Moreover, your stipends and reimbursements for housing, incidentals, and meals will be subject to tax.

Travel Expense Deductions

Before 2018, travel nurses could claim travel-related expenses for deductions. However, tax laws changed (and are further subject to change) and travel expenses are no longer eligible as tax deductions for travel nurses. Nor can they claim deductions for licenses, CEUs, or other work-related costs. This means the only route available for travel nurses to recoup this cost or offset it, is to focus on negotiating the traveling stipend and housing stipend your agency offers and the rate of reimbursements for meals, and incidentals.

Establish Your Tax Home

To be certain that the IRS would agree with your tax home identification, here are some factors to consider:

Did you spend at least 30 days residing in your tax home?

Are you registered to vote in your tax home?

Do you have duplicate living expenses because of your travel contracts? (For example, do you have a mortgage or rent payment at your tax home residence while also paying for housing on your travel contract?)

Does your car registration or driver’s license show your tax home address?

Do you have social ties to the community near your tax home?

Is your tax home listed as your official mailing address for bank statements, tax documents, and other official U.S. mail?

Do you work within the community of your tax home? (The simplest way for travel nurses to establish this is to routinely pick up PRN shifts while they’re between travel contracts.)

Hire a Tax Professional

As you can see, travel nurse taxes are more complicated than the typical nurse tax situation. Focus on maintaining documentation for your tax home, keep the utilities in your name, and hold onto all documentation that applies to travel expenses, living expenses (both on location and at your tax home) and work contracts to maintain your ties to your tax home community. Documentation is not only a part of our nursing career, it is vital to support your tax submissions in the event you are ever audited.

We strongly recommend to our travel nurses hire a tax professional when April rolls around every year. While it is possible to be your tax expert, tax laws change, and the wording is often vague for those of us whose education and career lie outside the tax realm. Establish a rapport with your tax professional and ask what you can do this following year to maximize your financial situation to set you up better for the following tax season.