How can I estimate the taxes that will be taken out of my paycheck for the housing that the travel company provides for me (if I do not have a residence to claim)? How do I compare that to having a residence, tax wise?

Ask a Travel Nursing Housing Expert Answer:

Thank you for your question.  First, I must say that I am not able to give you specific tax advice. Please ask your personal tax professional. But I can explain how this works:

1. If you take travel nursing company provided housing, there are no taxes taken out of your paycheck for this, whether you have a permanent tax home or not.
2. If you do not have a permanent tax home, companies are not able to give you tax-free monies as a housing stipend. The reason for this is because of your classification as a “traveler” according to the IRS. A traveler is someone who takes a work assignment away from their home base for a specific, limited amount of time. Because you are away from your homebase for a work assignment, there are costs that you would incur that you would not have if you stayed home. Housing is one of those costs. If you do not have a permanent tax home, then you are never away from that home.
3. If you have a permanent tax home, then one of the options companies have is to reimburse you for your housing costs in a tax free manner.

In the end, it all comes down to what you are most comfortable with. Some will want to take the control of finding their own place to stay while on assignment, while others would rather have their company do the work.

Hi David, thanks for your response. I did get your book and it helped a lot! I do have another question for you though, regarding overtime. When you take the tax advantage program what is your overtime based off of? Is it your “hourly” rate or your “blended” rate?

Thanks again!

Ask a Travel Nurse Answer:

Thanks for the follow-up question and thank you for also supporting my book; I’m glad to hear it has helped.

I do want to clarify a bit here because I think I know what you are asking, but the term “blended rate” usually has a different connotation. Usually the place where most people will encounter a “blended rate” is when working in California. This is because anything worked over eight hours is considered overtime and paid at time and a half. So if you work a twelve hour shift, you will earn a base rate the first eight hours and an OT rate the last four. For example, let’s say that you are contracted to work in a California hospital that is quoted as paying a blended rate of $35/hr. If this is the case, your base rate would be $30/hr which is what you would make the first eight hours. Then, the last four hours are billed at an OT rate (1 1/2 of $30 = $45/hr). Doing the math (and by the way, I can’t believe you’re making me do math…I went to nursing school to AVOID math), your rate is figured by taking what you earn in the first eight hours ($30×8= $240), then figuring the last four hours ($45×4= $180), add the two ($240+$180= $420) and divide that by 12 hours ($420/ 12) which gets you a “blended rate” (or average) of $35 per hour.

Now, I understand that a tax advantage program can change this equation a bit and I believe what you might be asking is if OT will be figured off of your base rate before or after the tax advantage program is implemented. In that case, it actually might depend on your company and possibly even the assignment you take because some assignments will be paid through your travel company and some assignments might be paid through the facility’s payroll department. If your company is paying you, they will probably base your OT rate off your tax advantage base rate (the lower figure). If you are being paid by the hospital, they might not see the base rate your company pays you, only the base rate they are contracted to pay you (meaning that they might figure OT off of the higher rate they see). However, it has been a long time since I was eligible to participate in any tax advantage program, so I do not remember if you are even able to participate in one if the facility is paying you.

To make a long story short (too late), in the end, you will ultimately have to ask your recruiter or the payroll depart on each assignment whether or not the company or the facility will be paying you and how the OT will ultimately be figured.

Sorry to be so long winded only to tell you that your travel company will ultimately need to give you that answer, but I wanted to put out a bit more information for those travelers who have not yet encountered that situation.

David
TravelNursesBible.com
david@travelnursesbible.com

Ask a Travel Nurse Question:

I am going to be taking my first travel position and need some help understanding what they are quoting me. Originally they offered me $33.00 per hour and then when I received the contract it was quoted as $23.00 per hour (taxed) and $410.00 per week that would be untaxed. I am having a difficult time deciphering if this is a good deal or not? (Also included is housing at an extended stay hotel, license reimbursement-$200, and $300 transportation bonus) I would greatly appreciate some help with how the tax free money thing works.

Make sure to give yourself enough time to find all the deductions possible for a travel nurse.

“Some travel nurses may not be aware that there are numerous tax breaks associated with this career choice,” says Tera Tuten, director of operations for NurseJungle.com.  “It can be extremely time-consuming to read IRS documents and decipher what applies and what doesn’t…”

If thinking about taxes gives you an ill feeling, fear not for there is help. Many websites on the internet and tax preparation companies can help you figure out exactly what you need to do to file your taxes correctly, and more importantly find you those many tax breaks afforded to a traveling nurse. In order for you to be eligible for deductions and breaks you must meet two very important criteria.

1. Tax Home.

A tax home is simply defined as the place where you reside for the majority of the year.  This is your permanent residence—the home you return to between assignments.  This is the residence that produces significant and recurring expenses, such as a mortgage or rent payment.  By determining your tax home, you are setting up the groundwork for travel deductions because you can show that you are often leaving your permanent residence to travel to another location to work for an extended period of time.  To show proof of your tax residence, it’s important to remember to:

• Maintain your driver’s license and car registration in your tax home state;
• Be a registered voter in your tax state;
• Maintain proof of your residence, such as mortgage documents and/or rent receipts;
• Return to your tax home at least once each year and file a tax return in your home state.

What if I don’t have a permanent residence? If you travel so much that you do not have a permanent residence (your housing at each assignment becomes your permanent residence), you are ineligible for travel deductions because, by IRS definition, you are a transient and aren’t truly traveling.

2. What is considered “temporary?’

Temporary, according to the IRS, is anything less than 12 months.  If you worked in one assignment during the entire previous calendar year, you are not eligible for IRS deductions.

Once you’ve determined your tax home and have determined your travel nursing assignments were indeed temporary, it’s time to take advantage of the many deductions available for you.

So if you meet these two all important criterion, then you can expect to receive some hefty breaks when it comes time to file your taxes for 2010… As long as you have proof. Being a travel nurse, it is wise to save every receipt from any transaction that happened while you were on assignment, as long as it pertains to your job. Meals, travel, housing, and other work-related expenses are all eligible for deductions so long as you have the receipt. Other important documents you want to keep are your contracts from the staffing agencies. Whether you worked for one or many different companies, you’ll want to save the contract because it holds vital details that can make the tax process much easier.

If you’re feeling a bit overwhelmed, here are some sites to help you get your taxes in order.

Travel Tax – Featured in Healthcare Traveler magazine, Locum Life, PAN Travelers, Delphi Forums and National Public Radio. The company has 17 plus years experience in Travel Nurse Taxes. Started by a traveler for travelers. Starting this week, Travel Tax will be hosting a number of different tax seminars all across the country as well as audio conferences if you’re not able to attend the live sessions. To see the scheduled dates and times, visit Travel Tax tax seminars.

Download a Travel Nurse Tax Guide provided by Kobaly.com.

Take advantage of the Travel Nursing Tax Advantage Plan… Visit TravelNurseToolbox.com to learn more.

If all else fails, remember you can always consult your recruiter and their company for help with your taxes. Good luck!

The tax information contained on TravelNursingBlogs.com and from any communication related to this blog is for information purposes only. Please consult with your personal accountant or tax preparers for any matters concerning your own income taxes.

Travel Nurse Tax Pro is an accounting firm that specializes in tax preparation for travel healthcare professionals, but more than that they offer some great tools. For example they have a Tax Organizer you can download and a survey for travel nurses to help you determine if you have a qualified “tax home” and where your “permanent residence” is located.

Just wanted to make sure it got included in our travel nursing tax resource list.

Disclaimer: I am not an accountant and myself or Medical Solutions have not worked with any of the companies listed. Also, please take the advice you read in the above articles as reference only and be sure to consult a certified tax professional for your specific situation.

The answer to her question depended on many specifics. If looking at it from a strictly monetary point of view, (as in, which would be cheaper?), then we can take a look at the following example:

Let’s say that your mortgage was $900 a month, but to rent an apartment and use that as your “tax home”, it would only cost you $600 a month. Sure, you are paying $300 less monthly, but then what are you buying for that $600? Then again, maybe your mortgage is only $100 in difference between the two and you rationalize that for an extra $100 a month, you would rather have the house as an investment. But, then you must think about what services you will need while you are away. By the time you hire someone to cut the grass and maintain upkeep on the house, maybe you are back at a difference of $300 between keeping the house verses renting.

I personally am a fan of real estate. Even in this market, if you buy something practical, it should be an investment that returns your money and then some. I have a condo in Ohio and did use that as my “tax home” while I traveled. It worked well because I could leave for months at a time and not have to worry about anything outside (the condo association takes care of all that). I did have my father look in on the place from time to time, but he never had to do anything.  
 
I went back last year and turned my condo into a rental because I wanted to take advantage of the home market in Phoenix. This eliminated my condo as a “tax home” because I was no longer duplicating my expenses (which is one criteria for the tax deduction). However, I purchased a home in Phoenix and the next time I take a travel assignment out the Phoenix area, I will use this new home as my “tax home”.  
 
You can probably claim an apartment as a tax home if you are still paying to maintain it while you travel. I have to say “probably” because when it comes to tax deductions, everyone’s specific situation will be different (now is probably a good time to add that old disclaimer: see your tax advisor for more information). 
 
But, I won’t leave all of you hanging without a great resource. Joseph Smith is a tax advisor who also contributed to the chapter on taxes in my book on travel nursing. He was once a traveler himself and works preparing tax returns for other travelers. He is on the web at http://www.traveltax.com. His website also has a lot of good information on taxes for the traveling professional.

Whether you choose to rent or own, having an established “tax home” can help you add extra income to your pocket by taking part in your travel nurse company’s tax advantage program (many companies offer this, but not all). If you are deciding between the two aforementioned options, work the numbers yourself and see which might be best for you. If you need help with the calculations, try contacting Joseph at Travel Tax for some professional assistance.

Two great resources for tax information for the traveler are Kobaly.com and Traveltax.com. The later of these two is the site of Joseph Smith who actually contributed content to my book in the chapter on taxes. Joseph was actually once a traveling professional himself and has quite a bit of information posted on his website.

Since everyone will have different circumstances under which they travel, you should always seek the information that is specific to your situation. If you require more assistance, I always recommend finding a tax professional like the two mentioned above.

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