Travel nurses filing their taxes for the 2019 tax year will need to take the current tax law into consideration before they file. The Tax Cuts and Jobs Act, passed in late December 2017, features a number of changes that can potentially affect travel nurses, including changes in income tax rates, increased standard deductions and a reduction of itemized deductions. The following are some tips we have gathered to help you through this year’s filing with as little stress as possible.
1. Hire a Tax Professional
We can’t stress this one enough. Even if you’ve been doing your own taxes without any issues previously, the new tax law can be confusing for even the brightest individuals. The benefit of hiring a tax professional is two-fold. Not only will they have a better understanding of the new law and compute your tax bill or refund most accurately, they can also offer you helpful guidelines to follow going forward. In other words, they can advise you of steps you can take now to maximize any benefits the new tax law may provide in your future tax filings.
2. Be Aware of Your Tax Home
If you are new to travel nursing, you may be unfamiliar with the term “tax home.” As far as the IRS is concerned, your tax home is the entire city or general area of your workplace, which is not necessarily the same place where you sleep at night. When it comes to travel nursing, you may have had “homes” in several states throughout the year. For tax purposes, you will need to identify one specific location you call home in order to calculate work-related expenses incurred away from that home. For tax years prior to 2018, travel nurses were able to deduct some of their expenses incurred while on assignment away from their “tax home,” including mileage, CEUs, licenses, meals and incidentals. The new tax law has done away with employee business expenses, which can have a significant effect on your tax bill or refund. (However, employers are still allowed to offer you tax-free reimbursements; more on that later.) Every individual filing is different, so it’s important to discuss yours with a qualified tax professional.
3. Don’t Forget State Income Taxes
If you have taken travel assignments in multiple states during any given tax year, you will need to be aware of each individual state’s income tax laws. Although not every state has an income tax, you are responsible for determining whether the states in which you took travel assignments do and filing the necessary paperwork, if applicable. Additionally, if you are maintaining a permanent home for federal tax purposes, make sure you do not file as a part year resident in other states, even though you may have worked in them. Sound confusing? It is! This is yet another reason it is very important to discuss your individual tax situation with a professional.
4. Keep Your Receipts
No matter what the current tax law or your individual tax situation may be, it is important that you keep receipts to justify your reimbursements for seven years. Even though the new tax law has done away with many of the itemized deductions that were commonly claimed by travel nurses prior to 2018, you could be required to show receipts that were used to calculate your deductions in previous years.
5. Negotiate Your Reimbursement Package, If You Can
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 travel nursing agency will try to make individual contracts more attractive with a more valuable reimbursement package.
Before you can file your tax return as a travel nurse, you need to work a travel assignment! Need inspiration on where to travel next? Read our City Guides for Travel Nurses and apply for your next dream assignment!
*We are not tax professionals. Please consult with a professional tax accountant to discuss your individual tax return.