Being a traveling nurse can offer freedoms that make it appealing to many. You generally get better pay, and you get to travel to new and exciting places. You live in a house or hotel you don’t have to worry about cleaning and maintaining in the long term, and if you want to you can eat out every day of the week.
But travel nursing does come with a few financial pitfalls unless you’re smart about handling your tax deductions. So let’s take a look at a few tax tips for nurses, and the most common things you can deduct.
First, Why Do Traveling Nurses Need Tax Deductions?
Often, traveling nurses get hired as an independent contractor as opposed to being a full-time employee. The difference means you’re accountable for all of your tax payments – and all of your travel expenses. You can reduce those tax payments by using deductions to reduce the amount of your income that qualifies as taxable by merely accounting for the business expenses associated with your job.
Some traveling nurses work as full-time W-2 employees for nursing staffing companies, but even if you do your employer may only reimburse you up to a certain point. Tax deductions are where you cover your bases for anything else.
Non-Taxable Stipends for Meals and Incidentals
As part of your traveling nurse pay, you’ll either be given a stipend for meals and incidentals or told to cover your meals and incidentals out of your salary. Generally, if you have an allowance, you can deduct the entire cost of it from your taxable income when you’re filing your taxes.
If your contract doesn’t explicitly outline a stipend, you may need to itemize your costs for meals and incidentals to deduct the exact amount on your taxes. Either way, keep your receipts. You want to be able to easily track and prove your deductions in the event of an IRS audit.
Traveling nurses often have many options for housing, many of them determined by the length of the stay. You may stay in a hotel, rent a house in the short term, rent an apartment on a short-term lease, or put up in extended stay housing provided either by the hiring company or by a third party.
Temporary housing generally can rack up costs for rent, possibly even for utilities depending on your situation. Luckily you can deduct these expenses on your taxes, especially if you’re also paying rent or a mortgage on your permanent residence (see section on tax homes).
Travel and Transportation Expenses
You’re also able to deduct any expenses you incur when traveling from point A to point B, including getting to the site of your next job – and going to and from your temporary housing to work each day. Travel and transportation expenses include:
Air Fare. Does getting to your next job site require air travel? A plane ticket can be an eligible deduction applied to your taxable income.
Cross-Country Bus Fare. If you don’t like to fly and instead take a bus or train, that’s still transportation expenses that you can deduct.
Gas/Fuel Costs. You may even drive to your next gig – or drive to and from work with a rental car. Guess what? You can deduct that too.
Car Rental Fees. If you’re paying to have a vehicle solely for work while you’re traveling as a nurse, you can deduct the cost of renting a car.
Vehicle Maintenance Costs. If you have to pay to maintain a car that racks up travel mileage, wear, and tear from your job, that’s another deduction.
Public Transit Costs. If you take the public bus or train to work every day, you can count those expenses as well. Those few dollars a day can add up into a great deduction.
Whether or not you can deduct your vehicle’s leasing costs, however, is variable depending on if you keep a car solely for driving to jobs and don’t use it for anything personal. Consult a tax professional before attempting to deduct the actual cost of the vehicle lease or purchase to avoid an audit.
If you have a 401K, any contributions you make to it from your travel nursing pay count as non-taxable income. Working out 401K deductions may be a bit complex, but if you work with a tax professional, you can usually do a great deal to bring down the amount of your taxable income and thus reduce taxes owed.
Don’t Forget Your Tax Home
Although you might travel all over the country, you do need what the IRS considers a permanent residence. This location is a home or an apartment where you get your mail and use as your permanent address on any forms or applications.
Even when away you’ll still have to pay your rent or mortgage, etc. Your tax home is what determines a great deal about your filing status and options when the time comes to file your taxes. With these tax tips for nurses, though, you should be able to handle filing your deductions with no problems at all.
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.