Travel Nurse Taxes: How to get the highest return?

Many first time travel nurses (or even veteran travel nurses) may have several questions about filing taxes as a travel nurse – but all those questions center around one thing: how do I maximize my return? Here we’ll focus on the steps you’ll want to take to pay the least amount of taxes possible.

Because travel nurses are paid a bit differently than staff nurses and local travelers, travel nurses file taxes a bit differently. This is because travel nurses are paid a base hourly rate, that is taxable, and a weekly travel stipend that is not taxable – both of which equal their total pay in a given contract.

For example: If you worked 50 out 52 weeks in 2022, and your base pay (hourly rate) was $67, and your weekly travel stipend was $1,085, you would have a total income of $174,500. $120,600 of that (your hourly rate) would be taxed, and $54,250 of that (your weekly stipends) would not be taxed.

Hire a Tax Professional

Our best piece of advice for travel nurses trying to file their taxes is to HIRE. A. TAX. PROFESSIONAL. Even if you’ve been doing your own taxes without any issues previously, tax laws change all the time, and can be a bit confusing. The benefit of hiring a tax professional is two-fold:

1. They will always have a better understanding of the changes in tax laws and will compute your tax bill or refund with the utmost accuracy
2. They can advise you of the steps you can take now to maximize any benefits in your future tax filings.

If you’ve now found yourself wondering “how do I go about finding a tax professional?”, have no fear. We’ve compiled our best tips and tricks on how to find the best travel nurse tax attorney.

Be Aware of Your Tax Home

Those new to travel nursing will not be familiar with the term “tax home”.  A tax home as defined by the IRS is: “the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home.”

In order to prove you have a tax home, you, as a travel nurse will need to do one of two things:

1. Prove that the area in which your primary residence is located, is also the same area in which you earned the most income last year, or,
2. Be able to prove you visited your primary residence at least once in 2023, and are also able to prove that you have financially maintained that residence.

Because most travel nurses have not earned the majority of their income in the same area their primary residence is located, they will choose option two.

Such things as mortgage payments, receipts for rent, utilities or household expenses will qualify you for a tax home.

In order to keep your travel stipends tax free, you will have claim (and be able to prove) you have a tax home. If you do not claim a tax home, your travel stipends will then be taxes at the same rate as your base income.

Important Note: Because travel stipends are not taxed and are not considered income, they will not be reflected in your annual income.

Every tax filing is different, so it’s imperative you discuss your situation with a qualified tax professional, who will be able to optimize last years (and future) tax returns.

 

Don’t Forget State Income Taxes

As a travel nurse, odds are you’ve worked in multiple states throughout the course of the year. If that is the case, you will need to pay state income taxes in each of those states, including the state in which you’re claiming as your “tax home”.  You do not file as a “part year” resident in any of the states you worked in – even though you may have lived there for some time. You will only want to claim residency in the “permanent home” you used on your federal income tax return. This will most likely be your permanent place of residence.

Filing taxes as a travel nurse is very confusing, which is why we’ll keep recommending you hire a qualified tax professional (preferably one that specializes in travel nursing)!

Keep Your Receipts

While recent tax laws have done away with many of the itemized deductions you once could have claimed – many states  still allow for these deductions, even if you’re unable to do so at a the federal level.

You’ll want to make sure to keep track of all your receipts for expenses incurred while traveling. These should include receipts for housing/lodging expenses, a record of the mileage, and any other expenses you incurred while traveling such as uniform/scrubs, meals, utilities, CE courses, etc.

Pro tip: If you have a smartphone, odds are it has the ability to scan documents, which you can then compile and keep in a folder for easy access come tax season.

Be Aware That You Could Get Audited

If your monthly expenses are higher than your monthly income, it will raise flags with the IRS and increase your chances for getting audited. So be prepared. And the best way to be prepared? You guessed it – hire a tax professional who specializes in travel nurse taxes.

Negotiate Your Reimbursement Package

When possible going forward, try to negotiate non-taxable reimbursements for travel, meals, continuing education requirements, licenses, uniforms and other equipment you may need for an assignment into your employment contracts. Since you can no longer deduct many of these expenses on your own when you file your tax return, perhaps your staffing agency will try to make individual contracts more attractive with a more valuable reimbursement package.

Next Move will give you the maximum allowable IRS travel stipend as part of your contract.

A couple of options for tax professional that specializes in travel nurse taxes includes:

TravelTax
Travel Nurse Tax