Working as a travel nurse in multiple states has its own advantages such as high pay, exploring new states and healthcare benefits but it can also complicate your taxes. Therefore, it is important to understand tax before choosing to become a travel nurse as different states have different tax requirements. Here we will help you to understand travel nursing tax and how it works.
Understanding the concept of “Tax Home”
Tax home is the primary place of residence for travel nurses or where you maintain significant connections such as family, permanent job etc. Travel nurses claim tax home only in one state if they live at other state for longer time typically for one year then tax home might change. For example, if you live in Arizona but take a travel nursing assignment in Oregon, which lasts for several months then your new tax home is Oregon.
State Income Tax
State income taxes are taxes imposed by individual states on the income of the residents and sometimes also on non-residence.
States with no state income tax are:
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington
- Wyoming
Travel nurse non-taxable income
As a travel nurse some of your income is considered non-taxable. This non-taxable amount can reduce your taxable income, leading you to save more.
Types of non-taxable income
Per diem allowances: This includes meals and incidentals. IRS allows travel nurses tax free per diem payments so they can cover their daily expenses such as meals and snacks while on assignment.
Lodging and housing allowances: Housing allowances are also nontaxable as long as you live their temporary that means less than one year.
Travel Reimbursement (Transportation Costs): This consists of train, air fair or car rental.
Bonuses or other incentive pay: Sometimes bonuses or other incentive pay are also considered non-taxable if directly related to temporary assignments.
Important things to consider
Important things to consider related to taxes are as follows:
- The assignments should be temporary, that is not more than one year.
- Maintain your tax home which is your primary residence where you live when you are not on a travel assignment.
- Documenting your expenses, which is keeping records of your travel, lodging and meal to make sure that you qualify for tax free states.
- Maintain your driving license in your home state.
- Return to your permanent home after every travel nursing contract.
- Maintain your voter registration in your home state.
- Keep your car registration in your home state.
Be aware of audits
Travel nurses should ger proper guidance and to make tax process easier so there are no complications later. They should not rely on recruiters and travel agencies for tax advice. There fore it is important for them to maintain detailed records and work with a tax professional.
Conclusion
Travel nursing comes with a lot of benefits such as high pay, exploring new states, health benefits, house stipends and more but it also comes with tax complexities. It is important for travel nurses to understand the concept of “tax home.” Tax home is the primary residence of travel nurses where they say after their contract. It is also important for the travel nurses to understand what portions of their income is non-taxable so they can maximize their earnings. Taxes are very complicated when it comes to travel nursing therefore it is crucial for travel nurses to get an advice from a tax expert so that there are non-complications.
If you are a travel nurse and looking for jobs that best match your needs, then join SkillGigs now. Whether you want to work part time, full time or per diem, SkillGigs is here for you to match you with the jobs of your dreams.
