So you’re just starting out as a travel nurse, or you’re sizing up the opportunities out there and want to make sure you understand all the complexities around tax reporting. Things like housing stipends, moving stipends, effective hourly rate, etc can get confusing. Here we’ll try to answer some of the most asked questions traveling nurses have about their taxes.
Federal Taxes: Does anything change?
The simple answer is: No. Any work you do inside the United States is considered taxable by the IRS. Things get a little more complicated if you are a US citizen working outside of the country as the US is one of only two nations to tax based on citizenship status rather than where the income was earned. If you are in this situation we’d advise talking to a reputable tax advisor as you may be eligible for the Foreign Earned Income Exclusion.
State Taxes; Do I pay taxes in my home state?
This one gets a little more complicated. In most cases you will be taxed only in the state you are working your contract, however some states like Minnesota tax based on residency and are very strict about enforcement. Check with your state revenue department and if you fall under this category talk to a tax advisor about changing your residency to a state without a taxation system based on residency
What is the definition of a tax home?
According to the IRS a tax home is the general area of your main place of business or employment, regardless of where you maintain your family home. If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work.
What does this mean for the travel nurse? Well it means your eligibility for stipends may depend on whether or not you maintain a home away from the area of your contract. For all you vanlifers out there this might get sticky; if you live and travel in your van you are likely considered an itinerant worker and may not be eligible for travel stipends. Talk with your recruiter about this to see what impact it may have.
Can I rent out my tax home?
If you rent out the entirety of your permanent residence for more than two weeks a year the IRS may consider it a business property and not a residence. In this case the residence would no longer qualify as a tax home. Only renting out part of the residence, say a bedroom or two, still qualifies as a tax home.
This only scratches the surface on the topic of taxes. As a travel nurse we know you have a lot of questions and tax law is incredibly opaque. Look forward to our next post in this series and as always if you have a pressing question, contact a certified tax professional.
Disclaimer: None of this is to be deemed legal or financial advice. These are the opinions of Travelers Handoff staff based on their experience. If you have questions, talk to a certified tax professional.