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How Taxes Work as a Travel Nurse

Posted on: February 15th, 2022

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Taxes As Travel Nurse Blog

As a travel nurse, you take assignments from different areas of the country, meet new people, and develop new skills. One of the less glamorous aspects to travel nursing is navigating taxes. As a travel nurse, you are not an independent contractor. But, your taxes can be slightly different from a nurse working at a perm job.

The good new is that you don’t have to be a tax expert—in fact, we recommend working with someone who is!—but it’s good to know the basics when it comes to your taxes and have a good understanding of how they work in your career. Check back next month for a recap of our 2022 Tax Webinar.

Here’s an overview of how taxes could work as a travel nurse, but make sure you’re getting your advice from a licensed tax professional.

Compensation package tax benefits

In most cases, your total income is made up of your hourly base pay as well as some reimbursements. Your hourly pay is the taxable part of your income, and the reimbursements you get are non-taxable. Both of these make up your travel nursing package.

It’s your hourly pay plus the added stipends that make travel nursing a financially desirable career. These stipends are the fixed amount of money that is paid out all at once to cover certain expenses such as housing. Reimbursements are work-related expenses that your employer reimburses you for. Both stipends and reimbursements include:

  • Housing stipend
  • Meals
  • Incidentals such as Uber rides and parking fees
  • Travel expenses
  • Benefits such as paid time off, medical insurance, and bonuses

These stipends are enticing, but they can cause some issues if you need a loan from the bank or need to qualify for a mortgage. Since these are income-based, it can appear on paper that you have a lower income than what you really have since stipends aren’t reflected in your annual pay.

You can work around this by planning ahead and explaining your situation to lenders that you work as a travel nurse, or make sure to work with someone who understands how travel nurse income works. Be sure to talk to your travel nurse agency to learn about what they reimburse for.

Your Tax Home

You need to have a tax home if you want to take advantage of the non-taxable benefits from your pay package. Essentially, your tax home is your permanent home, the place you return to after an assignment is completed and before you move on to the next. If you don’t have one, your stipends will all be taxed.

This tax home is important to the IRS and you can qualify by making sure you visit this residence at least once a year and prove you pay for that primary home. This might mean showing proof of a mortgage or rent or other proof that someone else is maintaining that residence. Try not to take assignments that will last for 12 months in a 24 month period. You want to ensure you’re still spending time in your tax home so it doesn’t look like you are living somewhere else.

The idea of a tax home can be confusing. Of course, once you get used to the concept, you can really enjoy your travel career by taking assignments all over the country.

What if you are audited?

Luckily, you’re in a field that doesn’t get audited often, but it’s a good idea to act as if you could be. Reduce your chances of an audit by making sure you have a tax home.

Keeping your paperwork organized in one place is another thing that can help if in the instance you do get audited. If you get digital copies of receipts or other documents, you may still want to print them out. This goes for your receipts as well. You will want to keep receipts such as:

  • Housing utilities
  • Meals
  • Mileage
  • Continuing education fees
  • Certification or licensing fees
  • Work attire expenses such as scrubs
  • Any lodging while you’re traveling

Know where your paperwork is for proving you have a tax home and are paying for living expenses in multiple states. Make copies of your rent or mortgage payments to your permanent home and your housing while on assignment. Keep copies of work contracts as well.

You may also want to consider working with a licensed tax professional who can answer your questions and make sure you’re following the IRS rules for taxes for travel employees. If you feel anxious or overwhelmed figuring out how your taxes work, there are plenty of qualified tax advisors who can help. Your travel nurse agency can be a great resource to answer many of your work-related questions, but when it comes to taxes, get your advice from a professional.

Ready to go on assignment? Contact the Barton Healthcare Staffing team today to get started!

Risa Kerslake, RN
About Risa Kerslake, RN

Risa Kerslake, RN, BSN is a Minnesota-based nurse and freelance writer. She has experience in a variety of settings including psychiatric nursing, triage, and case management. Learn more about her freelance writing at RisaKerslakeWrites.com.