Benjamin Franklin might have said it best: “In this world nothing can be said to be certain, except death and taxes.”
So it’s understandable that words like “tax advantage” or “tax free” might be music to a travel nurse’s ears, but Mr. Franklin did have the foresight on electricity, the urinary catheter and yes, taxes, too.
Word to the wise: Be leery if something feels like shortchanging “The Man” or seems too good to be true.
Tax season can be tricky for travel nurses, and that is why it is important to consult with a tax advisor and preferably one with experience in travel tax as there are unique aspects to consider when filing.
A few things that might come up as you embark on your 2016 tax journey:
You know it’s your permanent residence because more than likely it’s where you maintain your legal ties – the address on your driver’s license, car registration, voter’s registration, etc. A tax home is the location where you make the majority of your income, which is not necessarily where you live. Click here to read about how these tax rules affect the traveling nurse.
The risk of an audit is real but you can avoid any unforeseen messiness by keeping important documents.
- Mileage Log
- Receipts (except grocery or food receipts covered under meal per diems)
And hold on to these files because the IRS has up to 3 years to audit a return. Experts advise to keep documentation for seven years to be safe.
The painful truth is you cannot escape the documentation part so having a process for keeping record throughout the year saves time and headache come tax season. Click here and look under “What records should I keep” for more information on documentation.
You may see the phrase per diem, which might also be called allowances, stipends and reimbursements and are generally paid for lodging and meals. If you accept tax-free per diem, it’s imperative that you stay above board by following the IRS guidelines of ‘Duplication of Expenses’ and have a valid tax home. Click here to brush up on your per diem knowledge.
Travel tax regulation can be as complex as Google’s search algorithm. Sprinkle in the diverse marketing language that companies use to showcase their offerings, and things can go from complex to foreign in a hurry.
That’s why it’s important for travel nurses to be informed and find an expert tax advisor who can help navigate this season as well as next. After all, we know that April 15th is sure to come next year, too.