As travel caregivers, many decisions must be made that will impact your personal travel nurse tax returns. One of the most important decisions that must be made is whether or not you, as a travel nurse, are actually eligible for reimbursement of expenses incurred during your assignment.
Here are some common travel nurse tax myths and facts to help navigate this complex issue.
“In order to qualify as a traveler, all I have to do is travel 50 miles from my home.”
This is false as the IRS does not specify a mileage amount. The IRS states that you must be far enough away that you would “need to sleep or rest to meet the demands of your work while away from home.” To qualify for this, a travel nurse would need to consider the hours worked in a shift plus their commute time in relation to how much sleep is recommended to safely drive and whether the contract requires on call hours.
“I can bounce around from contract to contract and qualify as a traveler.”
There should be caution with this as the IRS could consider this an itinerant worker (one who maintains no permanent residence). Therefore their tax home is where you work, disqualifying you from reimbursements of travel nurse expenses.
“In order to reset my tax home, all I have to do is take two weeks off between assignments.”
This is untrue. Those breaks are considered “brief breaks” according to the IRS. Although the IRS does not state a specific number of months, various publications indicate the longer you return to their tax home, the better. A few factors to consider while assessing where your tax home is are:
- Where do you earn majority of your income?
- Are you duplicating expenses while on assignment? (Meaning: You are paying rent or a mortgage for a house at a specified location PLUS you are incurring rental costs while on assignment.)
- Do you have substantial ties to your tax home? Examples include maintaining a driver’s license, having immediate family members living in your house, maintaining memberships in organizations at your tax home or any other reason to prove that is your main home.
- Have you been in an area for more than 12 months?
- Have you been in an area for a majority of the last 24 months?
“Travel stipends are tax-free and I do not have to prove my expenses.”
This is a mistake that could cost you a lot of money during an IRS and state audit. Travel stipends are designed to reimburse temporary assigned workers for their actual expenses incurred. Therefore, if you are reimbursed for lodging as a travel nurse, but you don’t actually incur lodging because you commuted home, this could result in taxes and penalties. The best advice would be to maintain receipts, travel logs and consult with a professional tax advisor knowledgeable in travel tax laws on how to properly fill out tax home declarations or questionnaires.
As you navigate through this complex issue, remember to consult with a tax professional that understands travel tax law.