This week’s edition of the Traveler’s Guide to Nursing and Allied Health provides tax tips for filing your taxes in 2023.
Filing taxes can be challenging, even overwhelming, especially when you’re a travel nurse or allied health professional. While full-time and part-time nurses and allied health have all their taxes withheld, travelers are treated as independent contractors and responsible for paying taxes and self-employment taxes. With rules and regulations differing state by state, it’s best to consult a CPA or professional tax preparer if you have any questions, but here a few items to keep in mind as you prepare your returns.
Tax Home
Most references define your tax home as the location you live and earn the most money. However, the only opinion that matters when it comes to taxes is Uncle Sam’s. According to the official IRS definition, your 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.”
As a general rule, travel health professionals shouldn’t take an assignment longer than 12 months away from their tax home. Save mortgage and or rent receipts for payments made toward your tax home and your additional residences while on assignment. Be sure to keep your driver’s license and voter registration aligned with your tax home address.
Non-taxable Income
You’ll need proof of your tax home (mortgage, rent, utilities, home maintenance receipts) to qualify for non-taxable income. In addition to maintaining your driver’s license and voter registration, be sure to file your federal return and state return, if necessary, from your tax home.
The 2022 tax reform laws revised accepted job expenses for federal returns. Travel healthcare professionals can no longer deduct travel-related expenses such as food, gas, and mileage on their federal return. However, many states, such as New York, California, and Hawaii, will still allow travelers these deductions on their returns.
Many travelers receive stipends for these expenses, so save ALL of your receipts for work-related expenses. Still, stipends are not considered income, so they will not be reflected in your annual earnings. It’s not a big deal unless you’re trying to get a loan, mortgage, disability payment, or nearing retirement. All of which are based on your annual income.
State Incomes
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming are the only states in the U.S. where you do not have to file state taxes. Although every state has its own laws for filing taxes, travel healthcare professionals must file a non-resident tax return in each state they worked in (other than those mentioned above) and their tax home state.
A traveler whose tax home is in California but who worked in New Jersey and Illinois will have to file a non-resident tax return in those states in addition to their tax home state. Some states have a reciprocity agreement in which they agree a nurse will only have to pay taxes to one state. Consult a tax expert. Likewise, a traveler who lives in Florida (a state that does not charge a state income tax) but works in California and Hawaii will have to file a state tax return for both of those states. Everyone must file a federal tax return regardless of where they work or live.
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