Traveling nurses enjoy a highly rewarding career, with the average worker in the field earning between $1,180 and $3,100 per week, and money isn’t the only rewarding part of the job. As a traveling nurse, you can enjoy seeing new things, experiencing new restaurants, and meeting new people every time you make a trip for work - and even that may not be the most rewarding part. For many people, the most rewarding part of the job is resting your head at night knowing you’re earning a living through service to others that need you.
Of course, there are some challenges as well. One of the largest rearing its ugly head at the beginning of each and every year is tax time. Although traveling nurses provide a valuable service, they’re not exempt from paying income taxes. Moreover, there are special considerations involved, like where you’ve worked and the unique design of a traveling nurse’s pay package, which add even more complexity to the already confusing process of filing tax returns.
Read on to learn the ins and outs of taxes for traveling nurses and ensure you’re staying on the right side of the IRS (but bear in mind, though, that this article should not be taken as legal advice).
Traveling Nurses Aren’t Paid Like Typical Nurses
Most people in the United States go to work and receive a paycheck based on their hours worked, salary, or commission. However, traveling nurses aren’t most people, and this career has a non-traditional pay process. In fact, traveling nurses get paid in two ways, which have everything to do with the fact that they travel for business purposes. As such, they receive a base salary plus additional stipends.
The base salary for a traveling nurse works just like a base salary for any other career. It’s a predetermined amount of money nurses receive for their work, typically on a weekly or bi-weekly basis.
If you’re diving into the traveling nurse industry, you’ll be pleasantly surprised when you hear your first base salary offer. It’s common for companies to offer base salaries of around $100,000 or more per year.
As a traveling nurse, you’ll also earn stipends. These are additional payments that are often as high as your salaried payments, but they’re somewhat unique. Here are a couple of things you should know about stipends:
- Stipends are payments that are designed to reimburse you for additional costs associated with your job as a traveling nurse. After all, you’ll have to pay for lodging, food, gas, wear and tear on your vehicle, and more.
- Although stipends are a type of reimbursement, they’re also fixed. Unlike other types of reimbursements that are based on the money you spend after you spend it, stipends reimburse you for the money you spend before you spend it. This means you need to budget your expenses around your stipends.
Why Traveling Nurses Receive Different Pay
As mentioned above, traveling nurses have a wide range of expenses in relation to doing their jobs. As such, it’s important that they’re compensated for those additional expenses. The base salary is designed to help the traveling nurse cover everyday expenses while stipends are additional payments designed to assist the nurse with additional expenses. They can also have some valuable tax benefits.
How Income for Traveling Nurses is Taxed
Have you ever heard of a business that paid corporate taxes on money it spent to operate? That wouldn’t make sense. Similarly, you shouldn’t have to pay taxes on the income you use for the sole purpose of your job. That means you have write-offs too.
There are even more tax benefits for traveling nurses based on how they receive their payments. Read on for more details.
As a traveling nurse, your base salary is considered ordinary income just like anyone else’s. As with any other ordinary income, you’ll have to pay income tax to the IRS based on the amount of money you make each year.
For example, according to NerdWallet, if you’re single in 2023 and your base salary in addition to any other ordinary income you generate is $100,000, you’ll pay $17,835 in taxes per year. In most cases, traveling nurses will fall into the 24% tax bracket, but that doesn’t mean you’ll pay 24% of your income. Instead, you’ll pay:
- 10% on your first $10,275 in income
- 12% on income from $10,276 through $41,775
- 22% on income from $41,776 through $89,075
- And 24% on income over $89,075, up to $170,50
Regardless, it’s important to note that whatever your salary is as a traveling nurse, you’ll have to pay your income taxes on that money.
Additional stipends, on the other hand, are designed to reimburse you for additional expenses you’ll incur to fulfill your duties as a traveling nurse. Since this is money that’s earmarked for business expenses, it’s not taxable income.
That means if your annual salary is $100,000 and your annual stipends amount to $25,000, you’ll generate $125,000 in total income between the two. However, only $100,000 of that money is ordinary taxable income.
That being said, there are some requirements you must meet in order to enjoy tax-free stipends. We will discuss those requirements in greater detail later on.
This is where things can get very tricky. Some traveling nurses stay within the borders of their home state, while others travel across the country. If you only work in the state where you live, you’re in luck. You’ll only have to worry about your state’s income tax. However, if you are working in multiple states across the United States, you’ll need to pay close attention to income tax laws in each state you work in.
That’s because when you choose to work in another state, you’re making a silent agreement to pay your share of taxes required by that state.
For example, say you live in Florida but work in Florida, New York, and California. Although Florida doesn’t charge state income taxes, California and New York do. In this case, you wouldn’t pay any state income tax on the money you earn while working in Florida, but you’ll have to pay state taxes on the income you generate while in New York or California based on the tax regulations in these states. So, be sure to keep track of how much money you make in each state.
As with federal taxes, stipends are not subject to state income taxes anywhere in the US.
What Is a Tax Home and Why Is It Important?
As mentioned above, there are some requirements for your stipend to remain tax-free. The most important requirement is having a tax home. Keep in mind that stipends aren’t taxed because they’re not necessarily income. They’re excess money that’s designed to reimburse you for additional expenses associated with being a traveling nurse.
According to the IRS, your tax home is defined as an “area of your main place of business, employment, or post of duty, regardless of where you maintain your family home.”
To qualify for a tax home, you must visit your primary residence at least once per year and be able to prove that you’re paying for expenses associated with its maintenance. Keep in mind that there is no set number of miles your tax home has to be away from your family home. The key here is that it’s far enough for you to reasonably need to make resting accommodations prior to returning home.
Unfortunately, if you don’t have a tax home and can’t prove that you cover expenses associated with your primary residence, your stipends will be taxed.
Proof Regarding Your Tax Home
You can’t just tell the IRS you have a tax home: You’ll have to prove it exists and that you meet the requirements for the tax-free treatment of your stipends. It’s best to speak with a tax expert about your unique situation, but most traveling nurses do the following to make sure they’re able to prove their work homes:
- Keep receipts for your mortgage, rent, utilities, and other primary home expenses.
- Keep your driver’s license and voter registration in your home state, not your working state(s).
- Keep your car registered in your home state.
- Work on a per diem basis in your home state if you’re able to.
- Visit your home at least once per year, and keep receipts associated with the visit.
- File a state tax return in your home state if necessary.
What About Tax Deductions?
Tax deductions are important for everyone, and they can lead to a significantly lower tax burden for traveling nurses. Here’s how they work:
- You’re taxed based on your ordinary income.
- If you use any of your ordinary income for business purposes, you may be able to reduce your taxable income by the amount you spend on work.
- This leads to lower taxes and could even push you down into a lower tax bracket.
Write-Offs for Traveling Nurses
So, what can you write off as a traveling nurse? It’s best to speak with a tax professional about your unique situation, but most traveling nurses take advantage of the following tax deductions:
- The cost of hotels or other housing while working
- Either the cost of gas or a standard mileage rate for miles traveled
- The cost of clothing specifically used for your nursing position
- The cost of utilities like electricity, internet, phone service, water, and trash services you pay for while away from your primary residence
- The cost associated with continuing your education, certifications, and other expenses you may encounter while maintaining your position
- The cost of meals you eat while you travel
Keep in mind that if you plan on writing any of these expenses off, you’ll need to be able to prove them, so be sure to keep your receipts any time you make a work-related purchase.
Get Help Navigating the Complexities of Taxes for Traveling Nurses
The United States tax code is a highly complex one. Unfortunately, as a traveling nurse, you’re likely to run into many of these complexities due to the fact that you work away from your primary place of residence.
Going at it alone can be daunting, but you don’t have to. Call the pros at Winston Wealth Advisors. David B. Winston and his team have been helping traveling nurses navigate the complexities of their unique financial situations for decades.
Filing Taxes for Traveling Nurses: FAQ
Find answers to the most common questions about filing taxes for traveling nurses below.
Do Traveling Nurses Have to Pay Taxes?
Yes, traveling nurses have to pay taxes, but typically only on their base salary. In most cases, traveling nurses are able to prove they work far enough away from home to ensure their stipend payments are income-tax-free.
Do You Get Taxed More Times as a Traveling Nurse?
Unfortunately, you may be taxed multiple times as a traveling nurse if your home state charges state income taxes. That’s because you may need to pay income tax in your home state as well as in any other state where you worked unless these states have reciprocity. States with reciprocity have agreed that traveling nurses should only be taxed in one state.
It’s best to speak with a tax professional to determine if you’ll have to pay multiple state taxes.
Do Traveling Nurses Pay Taxes If They Live in a No-Income-Tax State?
All traveling nurses must pay federal income tax. Moreover, if you live in a state with no income tax, but work in a state with income tax, you’ll have to pay taxes to the state you work in.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.