Now that we have a pretty solid understanding of the basics of the travel nursing pay package (1, 2, 3, 4, 5, 6), let’s discuss the “Tax Free” aspect that everyone seems so fascinated with. I mean, what’s not to be fascinated about?! You’re not going to have to pay any taxes!! Is it possible that Benjamin Franklin was wrong when he said, “in this world nothing can be said to be certain, except death and taxes.”? The answer is yes, possibly. Please note the emphasis on “possibly.”
Before I offer any further information it’s important to note that I am not a tax adviser, Certified Public Accountant, or Lawyer. I am not in any way providing any tax advice. All information regarding taxes is informational and intended as a jumping off point. You must seek the help of professional tax advisers to gain a clear understanding of your unique circ*mstances. We recommend the folks at traveltax.com. That said we can move on to a detailed discussion of this issue.
Tax write-offs versus reimbursem*nts
Let’s begin by discussing where the concept of tax freemoney even comes from. In a general sense, the tax code allows for tax write offsor tax freereimbursem*nts for all ordinary and necessary expenses incurred while working away from one’s tax home. First let’s distinguish between a “tax write off” and a reimbursem*nt.
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A tax write off is when you reduce the amount of your taxable income by a specified amount in the course of compiling your tax return. For example, if you lived in Atlanta and went to Chicago on a business trip and incurred hotel and food charges while in Chicago that were paid out of your own pocket, you would keep the receipts and reduce your taxable income by this amount on your tax returns.
Now let’s say you took the same business trip, only this time your employer gave you a fixed amount of money to pay for your expenses before you left; that’s a reimbursem*ntor “per diem.” Many agencies and recruiters will call a per diem payment, a “stipend” which is a term that is technically used to describe any lump sum of money given for a specific purpose. This is the term that we will use moving forward because in the travel nursing world, it helps us differentiate between per diem as meaning PRNshifts worked on an on call basis, and stipends as meaning tax free money.
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What are travel nursing stipends?
The most common forms of tax free stipends offered by travel nursing agencies are travel stipends, lodging stipends, and Meals and Incidental Expenditure (M&IE) stipends. Travel stipends are determined in part by the cost of traveling to and from the job. These costs can include among other things airline tickets, or car mileage reimbursem*nts. The car mileage stipend rates are set and periodically updated by the IRS. For example, the standard mileage rate in January, 2012 was 55.5 cents for business miles driven.
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Maximum lodging and M&IE stipends are also set by the government on an annual basis. These rates are set by the General Services Administration and can be found here. The government sets these rates for every country in the world and the rates vary depending on the estimated cost of living in a given area. For example, the per diem rates (as the IRS calls them) in San Francisco, CAare going to be much higher than the per diem rates in El Paso, TX. When you’re looking up rates in the United States, you may see them referred to as the “CONUS Rates”. CONUS simply means the Continental United States. Per Diem rates for lodging and M&IE are the maximum rates that an employee can be given without an exchange of receipts while the employee is away from home on the business of the employer.
I’ve bolded the definition above to highlight the importance of being familiar with it. It’s particularly important to note two aspects of the definition. First, these are the “maximum rates.” That means that agencies can pay less if they’d like to, or need to. Second, these are the maximum rates that can be given “without an exchange of receipts.” This means that the agency does not have to collect receipts from the travel nurse for its own records.
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In Part 2 of this series, we’ll discuss the reasons that tax free stipends are so heavily utilized in the industry.
Related posts:
- Travel Nursing Pay – Qualifying for Tax-Free Stipends: Part 3: The 3 Factor Threshold Test Now that we have made the distinction between indefinite work...
- Travel Nursing Pay – Qualifying for Tax-Free Stipends: Part 4: The 3 Factor Threshold Test In our previous blog post, we discussed how to qualify...
- 6 Things Travel Nurses Should Know About GSA Rates Understandably, there is a lot of confusion about GSA rates...
FAQs
Discover your next travel healthcare job on BluePipes! Travel Stipend: $700 total for the 13 week contract. Free: Universal Job Application and Credential Management for travelers.
Do travel nurse stipends get reported to IRS? ›
Travel Nurse Stipends
These stipends cover duplicated living expenses like housing, travel, and meals. These stipends are not reported as taxable income as long as you are duplicating living expenses.
What is the 12 month rule for travel nurses? ›
Travel nurses and other HCPs often hear about a “12 Out of 24 Months Rule” that basically says you can't work in the same area for more than 12 months in any rolling 24-month period.
Can you be a travel nurse without a tax home? ›
Since these stipends are meant to cover the cost of duplicate expenses incurred as a result of travel nursing, they are given on a tax-free basis. Travel nurses that do not have a tax home (or do not meet the qualifications for having a tax home) are taxed on these stipends, lowering their total compensation.
Where does travel nurse stipend money come from? ›
Housing stipends are provided from the bill rate that the hospital agrees to pay the agency for the travel nurse's work. Most travel nursing agencies offer a choice between company-provided housing or a housing stipend.
What is the highest paying travel nurse agency? ›
Aya Healthcare is one of the largest travel nursing companies in the U.S. and offers some of the highest pay rates in the industry. According to their website, Aya Healthcare offers an average pay rate of $2,100 per week for travel nurses, with some positions paying as much as $3,000 per week.
Do travel nurses get audited by IRS? ›
Yes, travel nurses and allied health professionals get audited by the IRS. While most agencies employ their travel clinicians as W-2 employees, if you were a 1099 worker, you could be more likely to be audited. This is because your return contains a lot of ambiguity.
Are there any tax breaks for travel nurses? ›
Travel nurses are eligible for tax deductions, reimbursem*nts, and stipends for expenses necessary for their profession. To claim stipends and reimbursem*nts, travel nurses must work outside of their validated tax home and demonstrate eligible expenses.
What is the IRS rule for travel nurses? ›
Travel Nurse Tax FAQs. Do travel nurses pay taxes? Yes, all travel nurses must pay taxes on all income that they earned. They will need to file a tax return for every state that they worked in, as well as their home state where they have permanent residence.
How long can a travel RN stay in one place? ›
For How Long Should a Travel Nurse Leave Before They Return to the Same Place? The IRS directs that you cannot stay in the same location for more than 12 months in a rolling 24-month period.
Traveling Nurse Tax Deduction #4: Mileage Deductions
Traveling nurses often commute substantial distances, either by driving from assignment to assignment or traveling to and from the home base. As such, these miles can really add up. Thankfully, the IRS allows for a standard mileage deduction.
Will travel nursing go away? ›
While the pandemic presented unique challenges and opportunities, the pulse of travel nursing remains strong. The essence of this career choice—higher pay, flexibility, new connections, adventure, a politics-free environment, and professional growth—continues to thrive.
How do I start a tax home for travel nursing? ›
Here are 4 easy rules you can implement to help make sure you're successfully keeping your tax home.
- Duplicate your living expenses. Travel nurse contracts include weekly stipends, which are there to help cover living expenses like housing, travel, and meals. ...
- Rent a second home. ...
- Go back home. ...
- Keep traveling.
If you work in multiple states, it's important to understand that you become subject to the tax laws in each state in which you work, not just the state in which you live. Generally speaking, if you earn income in a state, you have a responsibility to report the income you earned in that state to that state.
Is a travel stipend taxable income? ›
Are travel stipends taxable? Because the Internal Revenue Service (IRS) does not consider travel stipends regular income, it does not require employers to withhold tax (federal tax, social security tax, or Medicare). This rule has long applied to travel stipends for business purposes.
What is a stipend in travel nursing? ›
Stipends are like reimbursem*nts, except you get them in advance instead of after the fact. Travel nurse stipends are the money a travel nurse agency adds to their salary to cover housing costs while on a travel assignment.
What is BluePipes travel nursing? ›
BluePipes helps you record everything hiring managers require. Access over 100 skills checklists for nurses, therapists, techs and more. Render your profile as a job application with background questions and signing statements.
Do local travel nurses get stipends? ›
Travel nurses duplicate housing expenses and are eligible for tax-free money, known as travel stipends. Contract nurses do not duplicate housing expenses and stay close enough to home to sleep in their bed every night.
How much does the VA pay travel nurses? ›
How much does a Travel Nurse make at US Department of Veterans Affairs in the United States? The estimated average pay for Travel Nurse at this company in the United States is $2,150 per week, which meets the national average.
