Common Tax Deductions for Nurses

When tax season rolls around, you can maximize your return and reduce your taxable income by understanding which deductions you qualify for. Transportation expenses, moving costs, and even a portion of meals may be potential deductions. Let’s go over tax deductions for nurses, including what they are and how to take advantage of them.

Tax Deductions for Nurses, Explained

Tax deductions are specific expenses that the Internal Revenue Service (IRS) allows you to subtract from your total income, lowering the amount of income that’s subject to taxation. They’re designed to acknowledge the costs associated with earning an income, and depending on the type of nursing work you do, they can have an important impact on what you pay to the IRS each year.

The types of deductions you can claim depend on the way you’ve worked as a nurse in the last year. If you’re employed on an ongoing basis and receive a W-2 at the end of the year, you likely won’t qualify for additional deductions because you’re an employee, and taxes have been taken out of your income before you are paid. But you can still claim some nonwork deductions, including the following:

• Student loan interest
• Charitable donations
• Dependents

For nurses who work independently, on contract, or as travelers, the rules are different. These nurses are seen more like self-employed business owners by the IRS, so they can deduct business-related costs. If you work this way, you might receive one or several 1099 forms, and you’ll use those to complete your tax documents.

For example, nurse entrepreneurs like legal nurse consultants tend to work for themselves and may be eligible for deductions associated with running their businesses. Personal computers, invoicing software, and office supplies may be potential deductions for these professionals.

Filing and Organizing Tax Deductions

Deductions are typically filed annually when you submit your federal income tax return, using IRS Form 1040. To claim deductions, you may need to itemize them on Schedule A, which is part of the form. Itemizing allows you to list specific expenses that qualify as deductions.

The IRS has specific guidelines on what qualifies as a deduction. If you’re not sure which expenses to deduct, consult a tax professional. Keeping records of your expenses throughout the year will also help you go into tax season with more clarity. This includes tracking work-related costs such as uniforms, continuing education, and professional memberships, which can be common tax deductions for nurses. Keep your receipts, and use expense-tracking software to stay organized.

A List of Tax Deductions for Nurses by Specialty

Now let’s go over a few things to know about tax deductions depending on your role.

Tax Deductions for Travel Nurses

As a travel nurse, you work with facilities on a contract basis. You may be able to deduct expenses associated with traveling and relocating for assignments because these are costs related to self-employment. But remember, not every travel contract qualifies you for these deductions, and you’ll need a permanent tax home to be eligible for travel expense deductions.

Examples of deductions may include the following:

• Travel: Airfare, gas, car and mileage
• Travel nurse housing: Airbnbs, hotels, and short-stay accommodations
• A portion of meals and incidentals: Lunches, laundry, and service tips
• Licensing and certification fees: Compact license costs, fees associated with obtaining a new state license, and specialty certification application costs
• Continuing education: Courses, conferences, and travel costs related to CE
• Professional memberships: Specialty and national association dues

To continue deducting these expenses, you’ll need to be sure that you don’t work at one facility for more than a year. After that, your work assignment can be considered indefinite by the IRS, and you won’t be eligible for travel deductions.

Remember that you’ll need to file a return for every state you have worked in throughout the year, so it might be worth hiring a tax professional to guide you through the process. See our article on travel nurse taxes for a more thorough explanation.

Tax Deductions for Home Health Care Nurses

Nurses who work in home health may work on an indefinite basis, as contractors, or as independent clinicians. Here’s what to know about deductions for each of these scenarios:

• Indefinite employees: If you work for a home health agency, you’ll submit your travel expenses to your employer for reimbursement. These will not be tax deductions, but you may be fully or partially reimbursed depending on your work arrangement.
• Contractors: If you work on a contract, your tax process and deductions will be similar to that of a travel nurse. Since your paychecks are pre-tax, you’ll want to set aside income for tax season, and you might need to file quarterly as well.
• Independent clinicians: Much like contractors, independent home health nurses are considered business owners, and can deduct their expenses with their tax filings. They may also need to file taxes quarterly since their earnings are not being taxed.

If you work as a contract home health nurse, see the travel nurse deductions above. Home health nurses may also be able to deduct these specialty expenses:

• Daily mileage and transportation costs
• Business uniforms and work clothes
• Medical supplies and equipment
• Home health training and continuing education
• Licensing and certification fees
• Home office expenses
• Malpractice insurance

Tax Deductions for Nursing Students

Nursing students typically can’t deduct business expenses unless they work independently as CNAs. However, students may qualify for the American Opportunity tax credit, which offers a maximum credit of up to $2,500 per eligible student if you submit qualifying school expenses, which include tuition and school fees.

If you plan to take advantage of this tax credit, you’ll need to document your tuition payments and complete Form 8863 on the IRS website.

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Legal Disclaimer: This article contains general legal information, but it is not intended to constitute professional legal advice for any particular situation and should not be relied on as professional legal advice. Any references to the law may not be current as laws regularly change through updates in legislation, regulation, and case law at the federal and state level. Nothing in this article should be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed to practice in your jurisdiction.