Guide to Travel Nurse Taxes: Overview and FAQ
Filing season can be a stressful time if you’re not sure how to do your travel nurse taxes. For example, exactly what is a tax home and how can you prove you have one? Which expenses are deductible and which aren’t? The intricacies of tax law might not be a thrilling subject, but it’s worth doing your due diligence so you can file with confidence.
There are a few main reasons that taxes for travel nurses are more complex than taxes for traditional nursing roles:
- Travel nurses may collect income in multiple states.
- Travel nurses often qualify for tax-free stipends, as long as they can show proof of a tax home.
- Travel nurses may have several 1099s and/or W2s to file in a single year.
For these reasons, you may want to consult a tax professional — like a certified public accountant (CPA) — especially if this is your first time filing taxes as a travel nurse. Another benefit of working with a CPA is that they can support you if you get audited. Here’s an overview of the terms you should be aware of and how to file your taxes as a traveler.
Taxable and Non-Taxable Income for Travel Nurses
To file correctly, you’ll need to understand what parts of your travel nursing income are taxed and which aren’t:
- Taxed income includes your paychecks, overtime pay, and bonuses or completion pay. These may be taxed by your agency before you receive them, depending on whether you’re hired as a W2 employee or a 1099 worker.
- Non-taxed stipends can include travel and housing payouts that you receive because you’re living and working away from your tax home. In certain situations, these may not be counted as income, and won’t count towards your Social Security benefit. In those situations, they also wouldn’t go towards your yearly earnings, so they couldn’t help you qualify for a home loan.
Tax Homes for Travel Nurses
What is a tax home? Travel nursing is dependent on you moving from one place to go work in another place. A tax home is a permanent residence that you maintain while you take on travel assignments in other locations — the IRS calls it your primary place of business. Thus, your travel nurse contracts are considered temporary leaves, and you incur expenses in both locations.
To maintain a tax home, you’ll generally need to:
- Keep records of mortgage or rent payments in your primary residence.
- Keep your voter registration in your home state.
- Maintain a driver’s license and car registration in your home state.
- Return to your tax home at least once a year.
- File a tax return in your home state.
- Not work in a facility away from your tax home for more than a year.
You won’t need to submit all of this proof of a tax home when you file, but you’ll need to have a record in the case of an audit. Also, your agency will likely have you sign an attestation of tax home eligibility when you onboard with them.
Travel Nurse Tax Reimbursements
Why maintain a tax home? Establishing a tax home lets you take advantage of reimbursements for travel, which will be paid back to you by your employer. These are expenses that you’ve incurred because you’re working away from your tax home, so the money you get back for these expenses is tax-free. These are different from stipends for housing or other living expenses, which are paid out according to your contract.
Potential reimbursements include:
- Gas and mileage expenses from traveling to your assignment
- Malpractice insurance
- RN and LPN licensing fees
- Uniforms
- Continuing education expenses
- Laundry
- Shipping necessities to your travel assignment
To qualify for deductions, keep records of all of your expenses. Maintain a file or take photos of your receipts, and compile them into categories for tax season. The IRS recommends keeping these records for three years or more.
How to File Taxes as a Travel Nurse
Looking for guidance as tax season approaches? Follow these steps to file your travel nurse taxes with confidence.
- Gather your documents, which can include any W2s or 1099s you’ve received for the previous year, documentation for additional income, such as investment dividends or rent paid to you, and receipts from deductible expenses.
- Understand your tax home, and whether you qualify to have one. Gather proof of mortgage payments and residency documents to prove your home base. If you worked a local travel contract, you likely won’t qualify for travel deductions for that period.
- Determine your taxable and non-taxable income. Your travel stipends may be reported on your W2 or 1099 forms, but be sure you’re reporting both types of income.
- File your federal and state taxes. You’ll need to file a non-resident tax return in each state you’ve worked in outside of your tax home. For federal taxes, you can file for free directly to the IRS. Working with a tax professional may be a good investment, especially if this is your first year traveling or you’re confused about filing requirements.
Tools for Tracking Expenses
You might be missing out on reimbursements and tax benefits if you don’t have an organized system for expenses and receipts. If you’re working with a CPA, ask if they have preferred programs for expense tracking. Here are some of the programs available:
Travel Nurse Taxes FAQ
Do travel nurses pay state taxes?
Yes, travel nurses generally file state taxes in each of the states they worked in during a given tax year. Keep in mind that states have varying tax requirements, so it’s best to check your state’s requirements or connect with a tax professional.
Do travel nurses pay taxes in both states?
This depends on your tax home and where you work throughout the year. At the end of the year, you’ll file federal taxes, as well as state taxes for your home state and each of the states you worked in that year. But each state’s tax laws are different — some have reciprocity tax laws, which mean that you’ll be taxed in one state only.
Some states, like Alaska and Florida, don’t even collect state income tax. But the majority do, and your filing will depend on your state tax home. If you’re not sure whether you need to file in a state, consulting a tax expert is the best move to gain peace of mind and avoid mistakes.
What is a tax home for travel nurses?
A travel nurse tax home is a place that serves as your home base, tax-wise. You may qualify for tax-free stipends and reimbursements if you have a main place of business or work and have to travel away from it to complete a nursing assignment.
When do travel nurses pay taxes?
Travel nurses generally pay taxes with each paycheck from their agency if they are W2 employees. If you’re a 1099 worker or expect to owe money at the end of the year, filing estimated quarterly taxes is the best way to avoid underpayment penalties. Either way, you’ll still need to file your taxes annually.
Can I be audited by the IRS as a travel nurse?
Yes. Travel nurses may be audited because their tax situation is more complicated than that of other professionals. Also, if your agency is audited, you will be as well. Because of this, it’s worth keeping thorough documentation of your tax home, deductible expenses, and tax forms.
Find Your Next Nursing Role
On the hunt for a fresh opportunity? Now that you know how to file travel nurse taxes, you may be ready for something new. Check out the latest travel nurse jobs in a range of specialties.
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.