As tax season approaches, traveling healthcare professionals must be prepared. Here’s what you need to know about your taxes for the upcoming year.
WHAT IS YOUR TAX HOME?
Many travelers confuse their tax home with their permanent home. While that is the case for most people, traveling healthcare professionals fall into a special category of people earning money outside their tax home. To qualify for non-taxable wages, travel nurses must have proof of their tax home. It is important to note that the IRS may reassess tax home if you spend too much time in another location. A general rule is to only stay at one travel assignment for up to 12 months to maintain your tax home.
There are considerable tax advantages to be aware of as a traveler, primarily stipends and reimbursements. These reimbursements are business-related expenses your employer pays you back to cover travel expenses like hotels, transportation, and other necessary fees. Additionally, stipends are delivered to you periodically to cover the costs of similar expenses, like lodging and meals, while on an assignment. For healthcare travelers, these stipends are tax-free and do not have to be reported as taxable income.
BEWARE OF AUDITS
While there is a very low chance, the expense-to-income ratio for healthcare travelers makes them more likely to be audited by the IRS than the average person. Therefore, it is essential to keep track of these documents as proof that you are maintaining and permanent home:
- Mortgage or rent payments
- Gas, electric, and internet bills
- Receipts for transportation to assignments (rental cars, flights, etc.)
- Mileage logs for traveling to and from assignments
- Copies of all your assignment contracts
To avoid an audit, find a certified tax professional for advice when filing your taxes. In addition, several apps and websites can help you organize expenses and records, like Google Drive, Expensify, and Turbo Tax.
FILING YOUR 2023 TAXES
Tackling your taxes can be intimidating for both seasoned and new healthcare travelers. But with the proper preparation and the help of a tax professional, it doesn’t have to be complicated. Use this helpful checklist to give you a good start on your 2023 taxes:
- Gather all W-2 and 1099 forms from your employer(s).
- Keep track of all receipts for travel-related expenses, like lodging, meals, and transportation. Remember, these may be tax-deductible.
- Keep documentation for continuing education courses, professional development training, and renewed licenses or certifications.
- Keep records of any state taxes paid throughout the year.
- Review tax forms or instructions from your tax preparer or the IRS.
- File your taxes by the deadline, April 18, to avoid late fees or penalties.
- Check the status of your refund and contact the proper authorities if an error is found.
Don’t be discouraged by tax season. It only comes once a year! Preparing yourself with good expense-tracking habits and document organization can make your taxes easier to manage. Remember to partner with a trusted CPA who understands healthcare travelers’ challenges!
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