For travelers, stipends are tax-free when used to cover duplicate expenses, such as room and board, and do not have to be reported as taxable income. You're About to Learn the Key to Earning Tax-free Money as a Travel Nurse. First things first, you have to know this. You are not entitled to tax-free money just because you are a nurse who is accepting a 13-week contract in a new state.
There are a lot of travel nurses who travel and have their entire paycheck taxed, and it's also a wonderful way to have freedom (and yes, still make a lot of money). Rules confuse businesses, nurses and other professions who also travel. They're gray because there haven't been enough cases in federal courts to tell us in black and white terms that “this is exactly how you do this. And they're worded in such a way that companies and tax experts can interpret them slightly differently.
And it hasn't been proven that anyone is right or wrong (yet). But there are some pretty standard guidelines for travel nurses that we can follow to keep ourselves safer in the event of an audit. Every company you come across will offer you tax-free stipends. In fact, you would struggle to find an agency willing to pay you all taxable income without tax-free stipends.
The very simplified logic for this is that tax-free stipends are offered for travel nursing jobs because they can be. But a deeper look at the subject provides insight into how companies benefit from offering tax-free stipends and how, in a sense, they are almost obligated to offer tax-free stipends. To keep your tax-free travel stipends, you will have the right to claim and be able to prove that you have a tax house. If you don't claim a tax house, your travel stipends will be taxed at the same rate as your base income.
There are two ways you can be paid as a travel nurse. Travel nurses are paid a “combined rate” of tax-free stipends and taxable hourly wages; or are paid a fully taxable hourly wage taxed on the total rate of pay. As a travel nurse, you may qualify for non-taxable income called stipends. These stipends are not taxable, as they are classified as refunds for accommodation, travel and meals.
Travelers love them because if they don't use the full amount of the stipend, they can pocket the extra. Therefore, it acts as a bond, but it is not taxable by the IRS. Not all travel nurses qualify for this tax-free money. To qualify, you must show that you are doubling your living expenses.
Travel nurses know that the best part of being a travel nurse is receiving a tax-free stipend as part of your compensation. Depending on how you structure your living expenses, it can really make a difference with the amount of income you earn to take home. The most important thing is to comply with IRS requests and hire a tax professional who specializes in nursing. Many travelers don't know it, but both the company and the nurse pay a tax for these government insurance plans.
Smith advises travel nurses to keep a receipt book to help them make tax preparation a little easier by having all their paperwork in one place. If it's a crisis rate or a short-term strike assignment, your salary will be considerably higher than the average travel nurse job. You've heard about it from co-workers, you follow some Facebook pages of travel nurses, but man, it's a little confusing. In this duration, travel nurses can make use of apartments and grocery stores, so their costs are expected to be much lower than if they used standard hotel and restaurant rates.
Unfortunately, maintaining a status qualified to receive the stipend is fraught with general unofficial rules and just some bad peer advice from other travel nurses. If a travel nurse claims a rented room or apartment as a tax house (for example, at her parents' house), the monthly amount paid should be comparable to similar market prices in the area. Because most travel nurses have not earned the majority of their income in the same area as their primary residence, they will choose option two. If hired, I agree to comply with all Nurses PRN rules and regulations, which I understand are subject to change by Nurses PRN at any time and for any reason without notice.
From tax houses to keeping your receipts and knowing exactly how your income will affect your long-term financial goals, here's the information you need to know about travel nurse taxes. This means that many of the travel nurses who will report much higher taxable income may have encountered a higher tax level and could pay up to 10% more in taxes if they worked consistently with very high paying contracts. Tax houses, tax-free stipends, hourly wages, bonuses, benefits, housing and travel reimbursement are factors to consider when understanding your nursing pay and taxes while traveling. If you can't prove you have a tax house, or you don't meet the requirements to have a tax house, you will be taxed on the stipend payments you receive as part of your travel nursing payment package.
So how would a travel nurse determine a tax house? Here are some criteria that help determine a tax house. . .