Self Employed

List of Common Tax Deductions for Travel Nurses

Linzi Martin

It’s no secret that the pandemic put a significant strain on our healthcare system. Today, as we stagger into the third year of COVID-19, hospital shortages have seemingly become standard across the nation. It’s a reality that’s gravely impacted employee burnout and overall dissatisfaction within the healthcare profession. It’s led some professionals to even consider early retirement. As a result, hospitals have had to look elsewhere to fill the lapse in employment. Enter: the travel nurse.

As an idea that emerged in the late 1970s, travel nursing quickly became a fun and immersive experience for registered nurses. In particular, it allowed them to see parts of the world while getting paid; and often, at higher rates than their normal hospital pay. Of course, hours could be demanding and travel expenses vary by region. Yet overall, it changed the way nurses could expand their outreach within hospitals, clinics, and other healthcare facilities.  

Until recently, travel nursing was seen more as a rarity. Mainly designated for those bitten by the travel bug. But as the ongoing shortages have taken a toll on hospitals nationwide, travel nursing has resultantly spiked in popularity. Travel nurses now make up 8 to 10 percent of the nursing population. That number is only expected to increase as several RN’s seek out higher pay and more flexibility within their profession. Though we know this means a work-life change, how does it affect your tax filing?

If you’re a first-time travel nurse, you may have some questions about tax deductions. For starters: How do I file? Or, what ways can I maximize my return? Since travel nurses are contract-based, they file a bit differently. That’s why, you’ll want all the information you can before signing up for travel nursing.

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What tax deductions can travel nurses take?

With travel nursing, registered nurses embark on short-term contracts at hospitals with temporary or seasonal staffing needs. Rather than working as a W-2 employee, most travel nurses take on the role as an independent contractor. While most independent contractors are able to deduct actual vehicle expenses, such as mileage, gas, and insurance. Travel nurses are a bit more restricted. In any case, you’ll have coverage of short-term housing and vehicle expenses through the following two tax deductions.

In 2022, there are two, non-taxable deductions for travel nurses to take:  

#1: Stipends for housing, meals, and incidentals

A stipend is typically a fixed expense that covers housing, meals, and other incidentals associated with your travel. The amount is usually distributed throughout the length of your contract to cover these duplicating expenses. Always check with your staffing agency to see which costs fall under your stipend.

#2: Travel reimbursements

In contrast to stipends, travel reimbursements are given after the fact. That means you’ll need to keep records of all travel expenses during your contract. In general, it’s beneficial to track mileage and keep gas receipts and invoices that are work-related. That way you can prove your deductions to the IRS.

Keep in mind, the only way to snag a stipend or reimbursement is if you’re working away from your permanent residence, also known as your “tax home”.

What is a tax home?

Those who are new to travel nursing may be unfamiliar with this term. As defined by the IRS, a “tax home” is “the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home”. In layman's terms, it’s the place you call home. Since travel nursing requires you to spend months apart from your permanent residence or permanent hospital job, you will need to show proof of:

  • Rent
  • Utilities
  • Household expenses

The bottom line: To keep your travel stipend or reimbursement tax-free, you must provide proof of a tax home. In addition, you must show that you visited and can financially maintain this residence while you are away. If you do not claim a tax home, your travel stipends or reimbursements will be taxed based on your income.

How long should I keep my records?

Even though keeping records for your tax home is not as easy as mileage tracking with MileIQ, it’s just as important to stay organized. Maintain receipts for all travel-expenses, including meals, housing, record of mileage, and more to ensure you can take eligible tax deductions. The IRS recommends that travel nurses, in fact all taxpayers, keep logs of their business expenses for at least 3 years. In general, this will keep you best protected in the event you are audited.

Tips for travel nursing

While travel nursing is certainly a fun opportunity, it comes with its own share of setbacks. Apart from being away from your home base, there are a few adjustments you’ll have to make. An important one being your taxes. For these reasons, it’s important to weigh the pros and cons before committing to this type of work assignment.

Here are a few tips to keep in mind:

Negotiate your reimbursement package

Staffing agencies are responsible for negotiating the terms of your reimbursement package. However, don’t hesitate to negotiate more non-taxable reimbursements for your contract. A lot of times these staffing agencies will work with you due to the high demand.

You could get audited

By now you know travel reimbursements are not considered taxable income. As a result, this may affect your overall tax outlook. If your monthly expenses are more than your monthly income, this could raise red flags for the IRS. Depending on your lifestyle, you may be subject to an IRS audit.

Hire a tax professional

MileIQ aims to provide the best resources and information regarding tax deductions. But we know every taxpayer could use a little help from time to time. Let’s face it — taxes are confusing! If you’re a first-time travel nurse, we recommend hiring a tax professional to help guide you through the process.

Want to learn more about travel nursing? Check out our informative guide on What Do Travel Nurses Need to Know About Taxes to learn more about this career endeavor.

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