Working as a traveling nurse offers you an opportunity to make more money, while being paid to travel to different cities. Although enticing, it’s important to understand your finances, since it can be frustrating and potentially expensive, to discover you owe more in taxes at the end of the year than you anticipated. As with any tax situation, you should seek advice from a licensed tax professional before filing. You’ll want to consider the factors below, however this should not be construed as tax advice, we’ll leave that to the pros.
Taxes for travel nurses can be a little bit more complicated than getting a W-2 form, as income often includes a combination of taxable and non-taxable money. One of the perks of a travel nurse’s compensation plan is a portion of it is tax free. There are two different types of pay packages you may be offered, flex pay and rigid pay. In a flexible package you’re allowed to mix and match variety of non-taxable stipends, while a rigid package is non-negotiable. When dealing with flexible packages, travel agencies are careful not to enter into an illegal contract essentially recharacterizing your income to avoid taxes.
When you see an advertised hourly rate it’s often a blended rate combining both your taxable and non-taxable income. Depending upon the city, this blended rate can be different. For instance, you could be quoted $45 an hour and paid a taxable wage of $30 per hour with the additional $15 split between non-taxable Meals and Incidental Expenditure (M&IE) stipend and a travel stipend. On the other hand, the agency may pay a taxable wage of $20 per hour and split the remaining $25 among the same non-taxable stipends.
To avoid tax problems at the end of the year, use the government per diem rates set for various cities and counties throughout the country. These are rates a government employee could be expected to be reimbursed for daily lodging and expenses and their daily M&IE. Relying on these per diem rates as a guideline can provide a foundation for working within tax-free compensation for each of these categories.
It’s important to keep in mind if you earn income by renting out your tax home while traveling, it will likely disqualify you from getting tax-free income. A variety of court cases and IRS rulings have set clear guidelines to determine your ability to qualify for tax-free income while traveling. One of those guidelines is how long you live in a single city over a two-year span. Plan to return home between jobs at least once per year and don’t spend more than 12 months in a single city over 24 months, so it doesn’t appear as if you’ve taken up residence in another state.
Maintain an agency job in the same geographical area as your tax home, which helps the IRS recognize you work on a regular basis where you live. Filing taxes is less complicated and safer when you commit to maintaining meticulous records during your travels. This includes logging your mileage and keeping a copy of all your contracts. There are some out-of-pocket expenses; most agencies don’t offer paid time off for vacations and most travel nurses have to pay for their own certifications, annual physicals and TB testing.
All things considered, a traveling nurse’s pay rate is comparable to that of a staff nurse, has a pay rate with the additional benefits of being able to travel and see the country. At Amare Medical Staffing , we are committed to helping you find the travel nurse position that best meets your needs and your dreams!