Winter is drawing to a close — and yep, that means the taxman is coming. As a travel nurse, your tax situation isn’t always simple, but don’t sweat it. You can get ahead of the April 15 deadline by gathering what you need from the year and making sure you understand your responsibilities. Here’s how to get started.
(A brief disclaimer: we aren’t tax professionals, and the information provided here is based on a general perspective.)
1. Locate and review your contracts
Here’s the #1 thing you can do to make filing your taxes easier: keep your contracts in a place where it’s easy to find them. They’ve got a lot of the information you’ll need to get started on your return.
Once you’ve located your contracts, make sure you understand the difference between your untaxed and taxes wages. Joseph Smith, a travel nursing tax expert, says this can be a challenge. “How the taxable and nontaxable income are presented in agency contracts often leads to a lot of confusion,” Smith notes. Check out our interview with Smith to get the scoop on how to do it.
2. Organize your receipts
Food, lodging, gas — it definitely adds up, and you’ve got the receipts to prove it. While many of your expenses are covered by your agency-provided travel stipend, some will likely go beyond and may qualify for a deduction.
Be sure to save receipts for anything that can be claimed as a deduction, which will make filing easier and allow you to support your claim in the event of an audit. Deductible expenses may include the following:
- Licensing and education fees
- Malpractice insurance
- Driving expenses, such as:
- Car maintenance
- Tolls
- Parking fees
- Transportation costs, such as:
- Car rental and gas in a rental car
- Taxi
- Train, airplane, and/or bus fare
- Housing and meals, including:
- Hotels on the road
- Food
- Beverages
- Related taxes
It’s a good idea to keep a log of expenses throughout the year. Summarize your expenses each month and organize your receipts in a file folder. Keep the folder with you while you travel to assignments so that you can add to it as needed and not misplace previous months. You might also check out these apps for scanning receipts and keeping them virtually.
3. Verify your tax home is valid
Another major challenge for travel nurses, when it comes to taxes, is determining and establishing your “tax home.” A tax home allows you to prove you qualify for deductions associated with travel and travel housing.
Your “tax home” does not have to be the same location as your primary residence. It’s your “economic home base.” To have a permanent “tax home,” you must meet at least two of three criteria:
- You earn significant income in the city, town, or metro area that is your tax home.
- Your expenses are duplicated due to traveling for work.
- You have not abandoned your tax home to travel for work.
You can provide proof of your tax home by:
- Keeping copies of rent documents or bills
- Maintaining your driver’s license or car registration in your home tax area
4. Prepare for filing in all of the states where you have worked
It’s wise to get a head start on your taxes by looking into the tax laws of the different states where you’ve worked. (You’ll handle the details with your accountant or during the process of filing.)
Looking at state laws means you get a better sense of what you may owe (or what you don’t!), allowing you to save money if necessary. It may also influence your decision about which states to work in going forward.
Another benefit to researching individual states is that it will give you a snapshot of how complex your situation may be. This could inform your decision about whether or not to get a professional CPA.
5. Find a professional accountant or reputable tax software.
Once you’ve completed the above steps, you’re ready to get started on your taxes! The final decision is whether to hire a professional or complete them on your own using tax software.
If you decide to hire a professional, referrals are a great choice. Contact your agency to see if they have an accountant to recommend. A fellow travel nurse may also have a good recommendation.
Watch out for accountants who promise huge refunds or say you can deduct everything. It could be too good to be true! Don’t be afraid to shop around or change accountants if you’re unsure about the person you’re working with.
If you decide to use a retail tax franchise, like H&R Block or Jackson Hewitt, ask whether you can work with a Certified Pubilc Accountant or Enrolled Agent. These people have the special certifications needed to handle a travel nurse’s more complicated tax situation.
If you hire an individual or a representative from a local agency, ask the following:
- What licenses/certifications do you have?
- How long have you been in the tax business?
- Do you outsource any of your work?
- What are your fees?
- When will my taxes be ready to file?
- What’s your privacy policy?
If you know you’re good with numbers, have been a travel nurse for a long time, and have confidence about the tax process, at-home software is also an option. Select a highly rated software to make sure you’ve got everything you need for a seamless and accurate filing.
Want more info about the tax filing process as a travel nurse? See our post on Travel Nursing and Taxes: How it All Works for a full guide.
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