If you’re like most travel nurses and allied health professionals, tax season isn’t something you look forward to each year. From figuring out what credits you qualify for to which deductions you can take, tax season can feel overwhelming, especially if you worked in numerous states and received stipend income throughout the year.
If you’re looking for ways to lower your taxable income as a travel nurse in the upcoming filing season, this article is for you. We’ll cover everything you need to know about tax deductions for travel nurses, including the difference between travel and non-travel assignments, top tax breaks, and common FAQs.
What Makes Taxes Different for Travel Healthcare Workers?
Unlike most permanent healthcare staff, travel healthcare workers receive two types of compensation: taxable base pay and non-taxable stipends. Taxable base pay is your hourly rate or set salary. You receive this pay for both travel and non-travel assignments. Many travel healthcare workers also receive non-taxable stipends to cover the cost of travel, like housing and meals. These stipends are intended to help you cover duplicate costs while working away from home.
It’s important to know the difference between travel and non-travel assignments. Non-travel assignments, or “local” assignments, do not include stipends and the income is usually fully taxable. These are great for traveling clinicians who do not qualify for stipends. On the contrary, travel assignments typically require you to work far enough from home to need to duplicate your expenses, like lodging while reporting for shifts. These assignments will include non-taxable stipends as a portion of your pay if you’re eligible.
Your eligibility to receive stipends depends on where your tax home is. The IRS defines a tax home as the main place of your business or employment, regardless of where your permanent address is. Establishing a tax home is important if you want to take advantage of travel nurse write offs. Working away from your tax home is considered a travel assignment and comes with non-taxable stipends to cover travel expenses, while working within your tax home is classified as a non-travel assignment with no stipends. One of the ways to prove your tax home is to visit it at least once every 12 months and pay maintenance expenses, like the mortgage and utilities.
You can read more about tax homes and stipend eligibility in Trusted’s comprehensive guide to Travel Taxes.
Top Tax Deductions for Travel Nurses
Travel nurses can take advantage of numerous tax breaks and deductions when out on assignment. Tax deductions reduce your taxable income to help you save money on your tax bill. For example, if you earn $75,000 of taxable pay and have $5,000 in eligible tax deductions, you are only taxed on $70,000 of income. Once you’ve determined if you’re eligible to receive stipends or not, there are several other types of deductions that you may be eligible to write off from your taxable income, including:
1. Education and Licensing Fees
Most nurses carry some type of license or certification that requires continuing education and/or renewal. This is a top tax write off for travel nurses, so be sure you deduct tuition, books, conferences, seminars, and supplies related to continuing education and professional licensing.
2. Medical Supplies and Equipment
Many travel nurses are expected to furnish their own equipment, including stethoscopes, shoes, scrubs, clipboards, medical watches, and sometimes personal protective equipment. Each of these items are tax deductible.
3. Professional Expenses
Expenses that are common and necessary for performing your job, like malpractice insurance, office supplies, and uniforms are also deductible.
4. Transportation
Leaving your home for a contract opens the door to transportation deductions, such as airfare, car rentals, trains, and fuel associated with driving.
Anything that is related to your travel assignment can potentially be deducted. Keep a list throughout the year and consult with a tax professional on the deductibility.
Top Tax Deductions for Allied Health Professionals
The same deductions apply to allied health professionals, but line items might look slightly different depending on your assignment. These expenses can include specialised training, certifications, or equipment unique to your discipline. Whether you’re a physical therapist with specific therapeutic tools or a radiologist investing in continuing education, these role-related expenses can often be deducted.
Establishing your tax home plays the most important role when considering deductions for allied health professionals. If you are on a long-term assignment, it’s critical that you maintain your permanent home to leverage tax free stipend payments.
Travel Healthcare Tax FAQs
What travel expenses can be deducted?
Any type of travel related to your assignment can be deducted. This includes airfare, gas, vehicle rentals, hotels, Airbnbs, meals, continuing education, medical supplies, and short-term rentals. Stipends received to cover these costs are non-taxable. Be sure you aren’t double-dipping by reporting both non-taxable stipends and a deduction for travel expenses covered by your stipend.
How do housing stipends affect taxes?
Housing stipends are usually non-taxable. However, if your housing stipend exceeds the amount established by the U.S. General Services Agency (GSA), you may need to pick up taxable income.
For example, the 2024 daily stipend rate set by the U.S. GSA for Arizona is $107. If the travel agency pays you $115 per day, the $8 over the standard rate would be taxable income. Most healthcare agencies set the stipend rate in accordance with the U.S. GSA.
Are there tax benefits for short-term assignments?
Yes, most short-term assignments come with non-taxable stipends, such as housing, meals, and transportation. Stipends are non-taxable if you work outside of your tax home, which is where your primary residence is.
What documentation is required for tax deductions?
Some agencies will list your stipend payments as a reimbursement on your W-2. If you have outside expenses, keep documentation, such as receipts and invoices. Also, keep adequate records to support your tax home claim.
How can healthcare teams assist professionals with tax planning?
Healthcare teams can assist professionals with tax planning by providing the necessary resources and education surrounding taxation for travel and non-travel assignments. In many cases, travel nurses and allied health professionals don’t understand that they can deduct expenses related to their profession.
Navigating Your Taxes with Confidence
As a travel nurse or allied health professional, understanding your tax situation is crucial, but it doesn't have to be a daunting task. Remember, knowledge is power, especially when it comes to maximising your deductions and making tax season work in your favor.
Are you ready to dive deeper and unlock the secrets of efficient tax planning for your unique career path? Our comprehensive Travel Nurse & Allied Health Tax Guide is your key resource. It's tailored specifically for professionals like you, navigating the intricacies of taxation through your travel healthcare journey. In this guide, you'll find detailed insights and practical tips to help you confidently claim what's rightfully yours and potentially save on your taxes.
