Key Healthcare Traveler Tax Deductions
With tax season come and gone, you may be relieved to be done with your taxes… but it’s never too early to start planning for next year! If you are like most Americans, chances are… you fear and loathe tax time as a healthcare traveler.

As the old saying goes by Ben Franklin, there are two things certain in this lifetime: death and taxes. So with next year in mind, here are a few things to consider when preparing your 2016 tax return – especially if you take multiple travel healthcare assignments.  

POINTERS WHEN PREPARING YOUR 2016 TAX RETURN AS a Healthcare Traveler

You will have to file state tax returns for every state that you have taken a healthcare assignment if you’re going to be earning income in more than one. Therefore, you will want to remember the following:

Each state tax return must be filed in accordance with the laws and regulation of that respective state – EXCEPT for those that do not have state withholdings
Some states have different filing deadlines from others – be sure to know when for each state so you can submit on time
If applicable, you will still file state taxes for where you declare yourself a resident and have a “Tax Home” – this will include declaring all earned income you have for the 2016 tax year, including what you received in tax-free states
Some states will allow you to receive a tax credit for the taxes you paid in other states. This is usually up to the amount you would be taxed normally in your home state
Alaska, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming states that do NOT collect state income tax
If working in multi-states, use the services of a tax professional is who experienced with the various states that you have worked – including your home state requirements
Don’t Throw Out Your Travel Assignment Contracts!
Just because you complete an assignment, does not mean you throw away your contract. A travel contract for healthcare professionals provides important details that will make your tax filing process all the easier – especially, if you happen to have worked for more than one staffing company during the calendar year!

Local Assignments are NOT Travel Assignments
This may seem obvious but some healthcare professionals who take travel assignments attempt to claim this. Local assignments such as Per Diem shifts do not qualify for meal deductions, reimbursements, or tax-free housing. Consult your tax preparer to ensure that you classify your assignments properly when preparing your 2016 returns. 

The IRS defines your “Tax Home” as your permanent residence where you live when you are not on a healthcare traveler assignment.

“Tax Home” can include: apartment, condominium, townhouse, or house where you pay rent to a landlord or a mortgage to a bank
Verify your “Tax Home” through a paper trail of regular financial payments – e.g. mortgage and utility invoices
Driver’s license and car registration must reflect same address as your “Tax Home”
Must be registered voter in same state as your “Tax Home”
Mailbox or storage unit at does NOT qualify as a “Tax Home” – must be a physical location of residence where you have a financial commitment
Healthcare Traveler Tax DON’Ts!
When doing your tax return, you will want to avoid a few “DON’Ts”, especially if your filing involves multiple assignments in multiple states.

So…

DON’T filed your federal tax return from an address that is NOT your “Tax Home” location
DON’T change your car registration, driver’s license or license tags to states where you’ve taken assignment
DON’T change your address on any bank accounts, credit cards, financial or legal commitments, and insurance forms to any other that is NOT your “Tax Home”.
Determining Tax-DeductABLE Travel Expenses

Once you establish where your “Tax Home” is and in what state, you can move ahead with documenting your annual travel expenses to show how often you’re away on a healthcare traveler assignment. Proving how many travel assignments you have worked as a healthcare professional (as well as that they are “temporary”) will allow you to claim your travel expenses as a tax deduction.

The IRS defines “temporary” as a line of work lasting less than 12 months of a calendar year.

TRANSLATION: If you’ve only worked one assignment throughout the entire calendar year of 2016, then you will NOT be eligible to claim deductions for travel expenses.

To be eligible for tax deductible expenses, you must have worked at least two travel assignments throughout the calendar year. Make sure you have saved all of your receipts from all your travel assignments so that you can use them to verify your travel expenses.

Travel expenses considered tax deductions, include:

Transportation costs – e.g. recording mileage, air fares, etc.
Housing and meals
Mobile and landline phone expenses
Computer and internet expenses
Dry cleaning, laundry, and uniform costs
Continuing education and licensure fees
Malpractice insurance
Job search costs
“No Direction Home”

Some healthcare travelers find it too difficult to maintain a “Tax Home” and prefer to stay on the road going from assignment to assignment. You may find:

The costs and necessary time of maintaining your permanent residence exceeds the $4,000 to $6,000 you may receive in tax savings annually
The experience and benefits of always being on the road outweigh having a home base
If this is you, then your housing at each assignment becomes your permanent residence – aka “Tax Home”. You would be what the IRS would classify as an “Itinerant Worker”. This means is that you would have to file as a “part-year resident” in every state where you take a travel assignment, and would have to file accordingly with each state per their tax laws and regulations.

Sadly, this also means you become ineligible to use your travel expenses for tax deductions, since you have no permanent home that you can claim as your “Tax Home”.

WHEN IN DOUBT, TALK TO AN EXPERT 

You are not expected to know all the answers when it comes to filing your tax return. As a healthcare traveler, you will want to seek out the best advice so you can obtain the maximum tax refund. Consult a reputable tax preparation establishment that specialize in income tax returns, or a tax accountant that has experience filing tax returns for healthcare professionals in multiple states.

So now that you know how to handle your taxes for the upcoming year… why not hit the road on a new travel adventure!



Disclaimer: This article provides general information that is not intended to be financial advice. Please consult a tax preparer to discuss your individual tax situation.

Cross Country Nurses

Tax Return Tips for Travel Healthcare Professionals

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