Travel nursing offers you the unique opportunity to see the world as part of your work. Not every job field offers this. Still, stationary workers have the benefit of a cut-and-dried compensation package and straight-forward income tax. As a travel nurse, you’ll need to become familiar with compensation packages so you have a better understanding of what they include, what’s considered taxable and what is tax free. Here’s what you need to know.
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Components of your travel nursing compensation package
Your compensation will consist of your base rate of pay (in the form of an hourly wage). This is taxable income that your employer will report to the IRS. Counted in your hourly pay rate are non-taxable reimbursements and stipends for meals and incidentals, lodging and travel reimbursement. For example, if your base rate of pay is $20 an hour, and you receive $3,000 a week for non-taxable items, it could increase your pay rate to $40 per hour when all reimbursements and stipends are accounted for. This is called a blended rate.
If your compensation package is not rigid, you will be able to pick and choose what non-taxable items you want it to include (as offered by your travel staffing agency), such as healthcare, 401(k), license reimbursements, etc. You may be able to reduce your hourly base pay rate to increase your non-taxable earnings; however, be careful not to reduce your taxable income below a certain threshold. Your staffing agency or a tax professional can work with you to ensure your compensation package is in compliance with IRS requirements.
Importance of a tax home
If you maintain a place of residence to which you return in between travel assignments, this is referred to by the IRS as your tax home. By maintaining a tax home, you will ensure you do not need to pay tax on any non-taxable reimbursements. If you do NOT maintain a tax home, these items become taxable by the IRS.
What you can do
To help make your tax responsibility a snap, do the following:
- Keep track of your mileage so you can be reimbursed for all of it.
- Don’t worry about tracking receipts for meals and groceries. The IRS allows a set limit for this and above the limit cannot be reimbursed.
- Return to your permanent residence in between travel assignments, and document this.
- Keep track of all your travel contracts for proof of where you worked and when throughout the tax year.
- Don’t accept an assignment for more than 12 months during a 24-month period. It will appear to the IRS that you no longer have a tax home.
Get proper tax advice
To ensure all your tax responsibilities are covered, simply find a tax advisor that specializes in the travel healthcare industry. They will be able to review any compensation offers and help you decipher anything you need to know. This way, you can complete your travel assignments without complications—leaving any tax concerns to the professionals.
Looking for your next travel assignment?
MedPro Healthcare Staffing is looking for you! Our recruiters will work with you to understand your reimbursement package; we also offer tax and financial articles including:
- 6 Financial and Tax Resources for Travel Healthcare Professionals
- Filing Taxes as a Travel Medical Professional: Four Things You Need to Know
- Planning for Retirement as a Travel Healthcare Professional
Our travel placements include nursing and allied healthcare. To apply for a travel nursing job, contact your recruiter today by calling 800-866-8108.