Travel nurses face unique challenges when it comes to filing their taxes. From dealing with per diems to filing in multiple states, it can be a complex process. To help you navigate your travel nurse taxes, we’ve gathered some expert tips that can make filing easier, help you save money, and avoid future tax liabilities.
1. Qualify for Tax-Free Per Diems
Travel nurses often receive per diems from their agencies to cover living and meal expenses. These per diems are tax-free, but you need to qualify for them. To do so, you must prove that you are duplicating expenses at home and at your work assignment or have a regular job that you return to annually in the same area. Make sure you meet the requirements before accepting tax-free per diems as part of your compensation package.
2. Be Cautious with Tax Software
Filing taxes as a travel nurse in multiple states can complicate matters, even when using tax software. It’s crucial to be careful when using these programs, as there are specific overrides that need to be done for multi-state taxes. Misreading instructions or making mistakes during data input can lead to errors. Remember, tax software is only as good as the person using it, so proceed with caution.
3. Keep and Read Your Contracts
Work contracts hold valuable information when it comes to your taxes. Yet, many travelers fail to keep them or take the time to read them thoroughly. Your contract can answer questions about how you’re paid and ensure that everything aligns with tax regulations. Make it a habit to keep your contracts and refer to them whenever you have tax-related queries.
4. Don’t Change Your Address When You Travel
When filing taxes in multiple states, it’s important to differentiate between temporary residences and your permanent address. To minimize confusion, think of your work assignments as vacations. You’re not permanently moving; you’re simply on a working vacation. So, there’s no need to change your address during your travel assignments.
5. Understand the Definition of a Tax Home
To qualify for tax-free per diems and deductions, your tax home must meet two out of three qualifications:
- Have regular employment in that area.
- Have a permanent residence in that area for which you are financially responsible when you’re away.
- Plan to return and spend at least 30 days there per year.
Understanding the criteria for a tax home will help you determine your eligibility for certain tax benefits.
6. Be Prepared for State Inquiries
States are becoming more vigilant in tracking tax-related matters to increase revenue. If you receive a notice, it means the government may have questions about your permanent residence or tax home. Be prepared to provide the necessary information and documentation to clarify your tax situation.
7. Keep All Your Documents Organized
One common mistake among travel nurses is failing to save important documents. It’s crucial to keep track of the following documents, which should be retained for at least six years in case of an IRS audit:
- Copies of all contracts
- Mileage log
- Receipts (excluding grocery/food receipts and gas receipts)
By organizing your documents, you’ll have the necessary proof to support your tax deductions and claims.
8. Stay Informed with a Tax Newsletter
Tax laws are constantly changing, so it’s essential to stay updated on tax reforms that may impact your travel nurse taxes. Consider subscribing to a tax newsletter or reading the TravelTax blog to stay informed about the latest developments that could affect your tax situation. Being proactive and well-informed will help you navigate the complex tax landscape more effectively.
9. Seek Professional Help if Needed
Filing taxes as a travel nurse can be overwhelming. If you find yourself struggling or feeling unsure of how to proceed, consider consulting a tax advisor. A tax professional can provide guidance on understanding your contract, communicating with payroll offices and agencies, and resolving any tax-related problems. Sometimes, getting assistance from an expert can yield better results and alleviate the stress of tax filing.
Remember, while these nine tips are valuable for your tax preparation, every tax situation is unique. It’s always a good idea to consult with a tax professional who can offer specific advice based on your circumstances.
At DHPL Travels, we understand the importance of efficient tax management for travel nurses. Our team of experts is dedicated to helping you make informed decisions about your taxes, ensuring compliance, and maximizing your financial well-being. For more information and personalized assistance, visit DHPL Travels.
Last updated 01/31/22
