Travel Nurse Taxes: Preparing for Tax Season

Travel nursing is a unique form of employment with many different tax considerations. Travel nurses are paid a premium to be available on short notice and jump into work virtually without orientation.

Traveling reached all-time popularity during the COVID-19 pandemic, with many nurses leaving their staff positions for better pay and more control over their schedule. According to AMN Healthcare, one of America’s largest staffing agencies, 95% of U.S. hospitals reported using travel nurses during the pandemic.

Though those numbers have decreased, travel nursing remains an excellent option for staff nurses looking to increase their income, expand their skill set, or experience a new location. If you’re considering making the switch, know the basics of tax preparation, tips to maximize your deductions, and mistakes to avoid.

As the name implies, one of the biggest draws of travel nursing is the opportunity to work in many locations throughout the country. However, while the big paychecks and exotic travel are huge draws, the complex reality of multistate tax preparation can be daunting. Misinformation is everywhere, and it’s essential that you know your rights and responsibilities to avoid costly tax mistakes.

We spoke with Sarah Gaines, MSN, RNC-OB, an experienced travel nurse and the founder of the Six Figure Travel Nurse LLC, who shared her tax prep tips for travel nurses.

When asked her number one piece of advice for new travelers, Gaines says, “I’ve learned throughout the years never to take tax advice from your recruiter. You may assume they’re the expert — and often, they’re very confident giving that advice. But only take tax advice from tax professionals.”

And, because we aren’t tax professionals, we spoke to financial pros to get their advice. Avoid these four tax mistakes as a travel nurse.

Before you jump into your first travel nursing assignment, it’s crucial that you do your research. The thrill of a new contract can be dizzying, but make sure you’re adequately prepared.

Answer the following questions before you sign on the dotted line:

While travel nursing does pay significantly more than most nursing jobs when factoring in your tax-free stipend, it’s not without costs. The cost of moving, travel, and continuing education are all things travel nurses often pay upfront and need to be accounted for in your budget.

From a tax perspective, the most complex aspect of travel nursing is accounting for the different taxes, rules, and regulations of each state you work in. If you travel in two or more states throughout the year, popular tax preparation software may not be able to meet your needs adequately.

It’s recommended that you reach out to a tax professional who has experience in tax prep for multistate submissions.

Travel nursing myths abound. One myth is that you must only live 50 miles from the facility to qualify for the nontaxable living stipend. Gaines says this is false and a mistake that could cost you.

She says, “The IRS doesn’t care that you live 50 miles away. They care that you can prove you’ve duplicated expenses. However, many agencies have rules like this. That’s where the myth came from, a misunderstanding between agency and IRS requirements.”

You must prove you reside in your home state and are duplicating expenses to qualify for that tax-free stipend. This means being able to produce records, such as a mortgage, lease, or utility bill.

Gaines also warns against accepting legal advice from social media influencers or recruiters for the same reason. For example, many recruiters may advise investing in a P.O. Box as a workaround, but this is tax fraud.

Now that you know things to avoid during tax preparation, let’s dive into the best tips to keep you organized and maximize your tax benefits.

There are many expenses that travel nurses can write off, but make sure you don’t double-dip. An example of double-dipping would be writing off a cardiopulmonary resuscitation course when you’ve already been reimbursed for that by your agency.

Each tax write-off is different; some things require calculations. Again, consult a tax professional if you need more clarification.

Here is a noncomprehensive list of travel nursing tax write-offs:

Consult a tax professional if possible and keep meticulous records of all expenses and income to avoid common tax pitfalls. Now that you know these mistakes to avoid and tips to use, you’re ready for tax season as a travel nurse.