March 22, 2024

3723 Views

Exploring the Top 5 Tax Advantages of Travel Nursing

Posted on March 22, 2024April 22, 2024 by Medely

Medely provided this article.

It’s tax season, so it’s the perfect time to talk about the top 5 tax advantages that a travel nursing career can bring to your life. Travel nursing not only offers an opportunity to explore new places and advance your career, but it can also provide significant tax advantages. Understanding and taking advantage of these tax benefits can make a huge difference in your overall financial health while on assignment. Let’s dive into the top 5 tax advantages of travel nursing and how you can make the most of them:

Top 5 Tax Advantages of Travel Nursing

1.) Tax-free housing stipends

Many consider the most significant tax advantage of travel nursing to be the tax-free housing stipends travel nurses get when they arrive at their new destination. Instead of receiving traditional housing benefits, travel nurses can receive a stipend to cover housing expenses while on assignment. These stipends are typically tax-free if specific criteria are met. Utilizing tax-free housing stipends can help travel nurses reduce taxable income and increase their take-home pay.

2.) Per diems for meals and incidentals

In addition to housing stipends, travel nurses may receive per diems (daily allowances) for meals and other expenses. Similar to housing stipends, per diems are often tax-free if certain requirements are met. With per diems, you can offset your living expenses while on assignment and potentially further reduce your taxable income.

3.) Travel reimbursements

Another tax advantage of travel nursing is travel reimbursements. Travel nurses can be reimbursed for travel-related expenses related to their transportation and traveling to and from their assignments. These reimbursements may include airfare, lodging during travel, gas mileage, and other transportation expenses. Depending on the specific terms of your contract and tax regulations (consult a tax professional with any questions you might have), travel reimbursements may be partially or fully tax-free.

4.) Deductible work-related expenses

When it comes to travel nursing, travelers often incur work-related expenses that may be tax-deductible. These expenses can include license and certification fees, uniforms, continuing education courses, and professional association memberships. Additionally, travel nurses may be able to deduct the costs of things like rent or mortgage payments, utilities, and home office expenses. By keeping detailed records and consulting with a tax professional, travel nurses can identify and maximize their eligible deductions.

5.) Retirement savings opportunities

Travel nurses can take advantage of retirement savings opportunities through employer-sponsored retirement plans like 401(k) plans. Some travel nursing agencies even offer retirement plan matching contributions, providing an extra incentive for nurses to allocate some of their paychecks for their retirement plan while on assignment.

Travel nursing presents many tax advantages that can help you improve your financial health while you’re on the road. From tax-free housing stipends and per diems to deductible work-related expenses and retirement savings opportunities, travel nurses can consult a tax professional to see what kinds of tax advantages they have at their disposal to minimize their tax liability and maximize their savings. By understanding these tax benefits, you can make the most of your earning potential and reap the financial rewards of a travel nursing career.

Note: Medely does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only.

Want to use Medely to sign up for your next travel assignment? We’ve got you covered. Medely works with thousands of the best facility partners across the U.S.

Check out our app here.

Find Your Next Travel Nurse Assignment with Our Job Board!

Are you on the hunt for your next travel nurse gig? Look no further than our job board! Click here to explore all our current opportunities.

Discover the Perfect Housing for Your Next Assignment

Need somewhere to stay on your next travel nurse assignment? We’ve got you covered. Check out our housing page to find your ideal home away from home. Click here to start your search.

By Joseph Smith @ Travel Tax

December 27, 2023

8061 Views

It’s Time to Think About Tax Returns

Posted on December 27, 2023December 18, 2023 by Joseph Smith @ Travel Tax

Once Christmas and New Year’s holidays have passed and you have moved on from wondering where 2023 went, one of the first rituals you will embark on is your tax returns. For many travel healthcare professionals, this can be a headache gathering the info, making sure you have all the documents, and then getting the return done. If you have many oars in the water, there is work to do.

Gathering your documents – the most common

W2s and 1099NEC

These are the basic forms that report income as employees and contractors. Travelers can frequently forget all the agencies and employers they worked with (remember the last two weeks of December 2022 that you were paid for in January 2023?) If you worked in more than one state, you want to make sure that your W2s show every state unless the one did not have an income tax or was a reciprocity state to your home state. This is where many travelers realize that they forgot one basic task during the year- checking the first pay stub of a new contract. If you worked in, say, Oregon and there is no Oregon withholding, then something is wrong. Always check the first pay stub of each contract. W2s and 1099NECs are supposed to be sent by the end of January. You should receive a W2 or 1099NEC from each agency you worked with in the 2023 tax year.

1099 INT, 1099DIV, 1099B

If you have a bank account with interest, own stocks with dividends, or buy/sell stocks, then it will be recorded on these forms. Many brokerages will issue a 1099 Composite to include all of these in one report. These 1099s come LATER than the W2s and 1099 and are not required until February 15. There are often corrections to these documents or delays that can mess up your tax return. Also, remember that just because you didn’t take money out of your brokerage account doesn’t mean you are not taxed. If the interest, dividends, or sales of stocks generated cash flow, you are taxed on these distributions. Also, if you have a 1099 Composite, don’t ignore the gobbledygook after the first few pages. There are possibly reportable transactions or deductible interest buried in those pages. Your tax professional will know what to look for.

1099R, 5498

Retirement statements. The number one thing travelers forget to give their tax preparer are 1099R or 5498s for retirement transactions. Did you contribute to a retirement account that was NOT managed by your employer? Then, likely you have some report for that that shows how much and to what type of account it was for. Did you withdraw, rollover, characterize, or convert funds to a different type of account? You will probably have a 1099R for that. The amount contributed to an employer’s plan will show on your W2s, so you don’t need anything for that.

1099G

This is an odd form used to report state refunds paid to you during the year and unemployment compensation. It’s used to report payments from the Federal or State governments. Unemployment is taxable at the Federal level, but many states exempt it.

W2G

Gamble? Did you win? It gets reported here and, in some cases, on a regular 1099MISC. Gambling winnings are considered income, and there are at least 2 methods of determining how much is taxable, but most people who gamble do it a LOT. We have seen clients with over 50 W2Gs, and making sure you have all of them can be a challenge.

K1s

If you are involved in any partnership, a shareholder in an S-Corp, or a beneficiary of a trust /estate, you are bound to receive one of these. If you had a relative die recently and received an inheritance, there is a very strong chance that you will get one. These can take FOREVER, especially when dealing with the competing interests of relatives when they bicker over a deceased person’s estate. Some investments are actually partnerships where you own a certain percentage of the investments.

1099K

This is the form that everyone was scared of – the new rules required every 3^rd party payment system like PayPal, Venmo, etc., to issue 1099Ks to each person who received more than $600 during the year. The IRS has delayed this till the 2024 tax year, so that is a problem for next year. When implemented this can affect everyone sharing the cost of a meal or reimbursing a friend.

1099MISC

This form reports many miscellaneous items, but the most common for travelers are rents (for renting your home out) and Royalties. If you use a property manager for your rental, they will often report your gross rent on a 1099MISC. Sometimes, gambling winnings show up on a 1099MISC as well.

Tax Law Changes, Opportunities and Bummers

IRS Personal Account

All taxpayers should open an Online Account with the IRS. You can see all of your statements and items reported on your behalf, make payments, and communicate with the IRS. It is simple to sign up. https://www.irs.gov/payments/your-online-account

Home Energy Credits

Credits for energy improvements to your home were greatly expanded for the 2023 tax year. There are no longer any lifetime limits like there were before. Only annual limits. That new HVAC system, windows, insulation, or doors are worth a lot more credit now.

EV Credit Transfers

If you purchase an EV, you can request that the credit offset the purchase price of the vehicle. Since there are income limitations, you can now use the income from the year of the tax return or the previous year to qualify. Transferring credit can be tricky if you exceed the income limits during the year unexpectedly. If the previous year’s income does not allow you to qualify, you will have to pay the credit back on the tax return. Credit transfers can only be done through dealers, not private sales.

Beneficial ownership reporting

Do you own or are a part owner of an LLC, Corporation, or any entity formed in a state? You are now required to disclose all owners of 25% or more annually, 30 days after any changes, and 90 days after forming a new one. The penalty for not filing is steep and can be as high as 10K or imprisonment if the lack of disclosure is willful. The report does not go to the IRS but to FinCEN (Financial Crimes Enforcement Network). Information can be found here https://www.fincen.gov/boi-faqs

By Joseph Smith @ Travel Tax

April 6, 2022

38093 Views

Talking Travel Nurse Taxes: Should I (ever) File Tax Exempt?

Posted on April 6, 2022September 28, 2023 by Joseph Smith @ Travel Tax

There are patients that we dread to care for. During report, we tactfully offer to take more patients, a more critical patient, or even offer to float to another area to avoid being assigned to the ONE patient no one wants.

In the tax world, one conversation tax professionals dread is with a taxpayer who filed exempt and owes a bundle of taxes.

You do everything you can to avoid the obvious, and you hope the taxpayer is already aware of their situation. If they confess, it’s your chance to exhale.

What is “filing exempt?”

“Filing Exempt” is a term that describes any change in withholding that claims extra exemptions or declares outright exemption for tax withholding. The form that is used for this is called the W4. Most states follow this Federal form, but some have their own that works similarly.

Travel nurses file exempt for various reasons.

The most common is to bolster take-home pay during a financial hardship. Those periods in life are understandable, but there are other reasons travel nurses file exempt that do not benefit them in the long haul, especially when there is an amount owed with the annual tax return.

1) Extended period of overtime

Travel nurses often confuse tax withholding with actual tax. The statement that someone is “taxed more” for working overtime is misleading. While more taxes may be withheld during an extended period of overtime, the extra withholding is triggered by formulas that anticipate taxes based on a prospective estimate of total annual income. If one makes $1000 a month, the withholding formula will base withholding on $12,000 a year. If they make $2,000 a month, the withholding will be based on $24,000 of income for the year. A dip in earnings or a part-time second job can trigger less than optimal withholding for that source of income when compared to the total income the travel nurse earns for the year.

2) Bonuses

The same principle discussed in #1 applies here. However, the IRS stipulates that a 25% flat amount be withheld for these payments. The employer can use the W4 claim as an alternative. The 25% is not a tax but simply a mandated default withholding rate to ensure adequate taxes are withheld.

Take Away’s

If you anticipate an extra boost of income or a large amount of deductions, consider the following before filing exempt from tax withholding:

Only adjust your withholding slightly by 1-3 exemptions. You may have some excess withholding, but you are still earning income that needs tax payments, and it prevents the worst-case scenario of the next takeaway.
Make sure that if you file exempt or significantly increase your exemptions, to change the withholding back quickly. Many travel nurses forget to do this. A one-month delay can cause the travel nurse to owe at the end of the year.
Just ignore it and leave the withholding where it is. You will get a larger refund at the end of the year, but it is one less hassle to deal with.

We hope you found this article on whether a travel nurse should file exempt or not helpful. We hope it answers any questions you may have.

Interested in a travel nursing job? Our job board is a great place to search for assignments, and if housing is an issue, our housing page can help. It’s time to make a difference!

Would you like to learn more?

Check out the TOP 10 Questions for Travel Nurses on Taxes.

By Joseph Smith @ Travel Tax

December 16, 2019

15164 Views

Another Tax Year Upon Us 2020: Tax Tips for Travel Nurses

Posted on December 16, 2019January 16, 2023 by Joseph Smith @ Travel Tax

As I write this piece, it is a few weeks from Christmas and I’m thinking about the Holidays. Lurking on the other side of the festivities is another tax season. This is the life a tax professional. Not much different from the mass exodus of patients during the holidays only to face the caravan of returning patients afterwards.

Are there new rules to consider?

This is the second year after tax reform and surprisingly, refreshingly, and incredibly, there are no big surprises barring any efforts of congress to pass something last minute which is unlikely to happen.

There are a few things to watch as we go into a new year.

End of year planning:

If you are a serious retirement saver, plan your employer-based retirement contributions to reach your goals before the end of the year OR set aside the amount you want to contribute to your individual IRA by 4/15/20
Set aside enough to contribute to any 529 plans you participate in to reach your annual target
If you have significant itemized deductions, consider making that end of year donation to take advantage of any addition tax savings
If you know you owe the IRS, state or municipality, make your payment before 1/15/20 to help reduce or avoid any underpayment penalties
Make sure all your employers and financial institutions have your current mailing or electronic address. You do not want to file your return only to discover that you missed an important document

New Items

New W4s – W4s are the forms that you complete when you start a job or wish to change the amount of tax payments that are withheld from your paycheck. For many years, It has asked for your marital status and the number allowances you are claiming. These forms have changed and the next one you fill out will look very different – like one of those new documents you have to learn with you start a new assignment, only this is the IRS, mind you. The new forms will be hard to understand as they will ask a LOT of questions about all your jobs and deductions. The shortcut? Just fill out your filing status and check the like box just above the midline that says, “multiple jobs”. Ignore the rest
Smaller refunds – The goal of the new W4s is to reduce the amount of refunds and amounts due. Basically, to make filing a tax return something closer to an end of the year statement than a bonus check.
More aggressive states – States have taken audits and reviews into their own hands and not waiting for the IRS to start the process. We fielded more state inquiries than ever during the 2019 filing season.
Politicians pontificating about taxes. An election year would not be the same without wide eyed promises to put more money in your pocket or socking it to the rich. Look for more practical proposals instead of the impossible.

*Edit

Last minute tax bills buried in appropriations bill

In my last article I had waited till the last-minute hoping Congress would not pull another end of the year change to the tax law, but ……… despite my confidence, it happened after I sent the article

Changes to note

1) Mortgage Insurance Premiums treated as interest. This provision ended with the 2017 tax year but has been renewed RETROACTIVE to the 2018 tax year through the 2020 tax year. Lots of amended returns!
2) Discharge of Principal Residence Indebtedness: This ended in 2017 and is now retroactive and extended through 2020 as well
3) Medical expense itemized deduction: Has now reverted to the 7.5% threshold of AGI through 2020. This is also retroactive
4) Tuition and Fees Deduction: This ended in 2017 as well but is back until 2020. When you cannot use the American Opportunity Tax Credit or the Lifetime Learning Credit, you can possibly use this deduction. It allows up to 4K of tuition and fees to be deducted. The income limitation is higher than the previous credits mentioned.
These items were not originally deductible on the 2018 tax return and now are with amended returns. Some taxpayers can amend now, BUT each state will now have to decided whether to follow these changes. So, it may be best to wait a few months before amending to see if your home state is agreeable.

Other items to note

1) You can now withdraw 5K from your IRA penalty free for the birth or adoption of a child
2) Starting in 2020, If you inherit an IRA, you now must withdraw all the amounts and pay the taxes within 10 years vs the life expectancy of the beneficiary.
3) The age limit for IRA contributions has been repealed
4) You can now use 10K of 529 Plan balances to pay off student loans and pay for the cost of apprentice programs. The student loan provision is a per child, per lifetime. In other words, the student can only use 10K in their entire lifetime and it only applies to loan principal, not interest
5) You are no longer required to withdraw from IRAs will age 72

We hope you have a great 2020!

Do you have questions regarding your tax home? Travel Nursing: What is a Tax Home? is a great resource for travel nurses.

By The Gypsy Nurse

June 23, 2019

35526 Views

Ask A Travel Nurse: Can I Rent Out My Tax Home?

Posted on June 23, 2019November 10, 2023 by The Gypsy Nurse

Can I rent out my travel nurse tax home and still receive a housing stipend?

The short answer is YES. However, there are additional considerations you should be aware of if you are attempting to use the tax home as a qualifier for ‘duplicated expenses’ for tax-free stipends. If you are receiving tax-free housing stipends, you need to have a residence available for personal use in the area of your tax home. Once you have rented out your house, it is no longer your residence but a business property.

ADDITIONAL TRAVEL NURSE TAX INFORMATION

As a Travel Nurse, Can I rent out my tax home and still receive housing stipend?

Answer:

Travel nurse tax home: Understanding the tax home can be very daunting. There are several articles on this topic, and it’s always recommended if you have questions, contact the expert: TravelTax

According to TravelTax:

Generally, you need to have a residence available for personal use in the area of your tax home. Once you have rented out your house, it is no longer your residence but a business property. However, here are a few options if you get the urge to become a landlord.

You rent it out and lease other accommodations somewhere in the same metropolitan area for yourself. This essentially turns your ex-residence into a business venture, regardless of profit or loss.
You rent it out but retain a portion for personal use, NOT just storage. (This could be done in the case of an in-law apt or renting to friends/family who you know well enough to stay at the house in between assignments.)
You rent it out as a vacation rental. This is great for those who live in tourist areas. You are allowed to rent it out completely for part of the year while you go off on assignment. Because the lease is for less than a year, and you are occupying it the rest of the time, it qualifies, and you can still keep your reimbursements tax-free.

See more at: TravelTax.com and check out the TOP 10 Questions for Travel Nurses on Taxes

Finished the travel nursing guide and are ready to look for an assignment?

Check out our travel nurse jobs!

By Joseph Smith @ Travel Tax

May 18, 2019

50190 Views

Travel Nurse Taxes & The 50-Mile Rule.

Posted on May 18, 2019May 14, 2024 by Joseph Smith @ Travel Tax

A traveler will eventually encounter the “50-Mile Rule” during conversations with recruiters or fellow travelers.

The rule is often discussed as an accepted law of traveling and defended with evangelistic zeal on social networking sites. No matter how many times it is refuted, the rule emerges in another conversation like a marathon game of Whac-A-Mole[I].

Let’s start with the facts:

THERE IS NO SUCH THING AS A 50-MILE RULE!

Ahhh that feels better… Now that we have released our frustrations let’s explain the origins of this myth.

The 50 Mile Myth and the 50 Mile Reality

Myth: As the myth goes, if you live more than 50 miles away from the assignment, you are entitled to, eligible for, or guaranteed a special government subsidy for lodging that is completely free of taxes. What a deal! If it sounds too good to be true, it probably is.

Reality: Tax-free reimbursements for lodging are only allowed when one is traveling away from their tax home (not their permanent residence)[ii]. The distance traveled must require the employee to get rest and sleep at the assignment location to fulfill their duties at the facility. There is no mileage benchmark for this. It is a simple overnight stay test.

Apply some logic here: Why should one receive tax-free lodging allowances without incurring lodging expenses?

Agency Use of the ’50 mile Rule.’

Unfortunately, a lot of agencies have this 50-mile verbiage in their contracts, tax home statements, and marketing. Some recruiters are taught this as an IRS rule and insist that travelers use an alternate address on their tax home forms to qualify for the provisions. It’s no wonder that there are more than 20 agencies being audited, and for some of them, the 50-mile myth is part of the problem.

50-mile rules are good internal screening tools for the agency to test the validity of the information that a traveler provides. However, it is not the litmus test to determine eligibility for tax-free lodging allowances. Even if a traveler prefers to drive 80 miles each way to work and back each shift, they do not qualify for tax-free lodging allowances. Why? There are no lodging expenses to reimburse.

Some facilities that use travelers or per diem staff incorporate a 50-mile limit for the professionals that the agencies submit for positions or shifts.

This is an attempt to keep current employees from jumping ship and working with the agency for premium pay. Some facilities have a longer distance requirement of 75 or even 100 miles due to the geographical nuances of the area that they serve. This facility rule is often confused with the mythological 50-mile IRS rule by recruiters and travelers alike.

There are only two places where there is a 50-mile rule in the tax laws.

First, §162(h) of the Internal Revenue Code allows state legislators to receive a per diem when traveling more than 50 miles for legislative business. They are not required to incur lodging expenses for the payment.

Furthermore, the second 50-mile rule applies to moving expense deductions. A taxpayer can deduct moving expenses when they permanently move their residence 50 mile plus their old commute to be closer to a new permanent job. Moving expenses do not apply to a regular traveler. A traveler is never “moving” – they are temporarily working “away from home.”

We hope this clarifies the 50-mile rule for you. We realize that it may be another futile attempt at resisting assimilation by the industry Cybermen. Maybe this installment of Traveler Dr. Who will prevail for good[iii].

[i] Our apologies to those of you that are too young to remember this game J
[ii] A Permanent Residence and a Tax Residence are different- refer to previous articles for this discussion
[iii] Both the Borg in Star Trek and the Cybermen in Dr. Who warned their prey of assimilation

Would you like to learn more?

Check out the TOP 10 Questions for Travel Nurses on Taxes.

By Joseph Smith @ Travel Tax

April 3, 2019

9542 Views

Travel Nurse Taxes: The Case for Extensions

Posted on April 3, 2019January 26, 2023 by Joseph Smith @ Travel Tax

By the time you read this, April 15 will be fast approaching. Travel nurses do not have a sedate lifestyle and the constants of travel make it hard to assemble the necessary documents to file their taxes by the deadline without rushing through the process. Fortunately, the IRS and state revenue agencies allow extensions to file returns – something most travel nurses should consider par for the course.

Travel Nurse Tax Extension

For travel nurses, a tax extension can be a life-saver. A tax extension give you an additional 6 months to file your tax return, making your new deadline October 15. It is not an extension of time to pay your tax bill. E-file or file IRS Form 4868 to obtain an extension.

What Extensions Do

Extensions delay the filing deadline of the return. For the IRS and most states, the standard extension lengthens the filing deadline to October 15. For travelers working overseas, a separate extension is allowed for longer periods if it is necessary to satisfy tests for foreign residence.

What Extensions Don’t Do

Extensions do not extend payment deadlines. If taxes are due, it is best to post payments ahead of the April 15 deadline. If balances are due and unpaid after the 15^th, penalties and interest will apply which are discussed below.

Extensions do not increase the chance of an audit. With the complexity of our financial system, more taxpayers find themselves waiting for critical documents well past April 15. Better to file later and right than to rush and be wrong.

Extensions do not cost anything. The IRS charges a fee to set up payment plans for delinquent tax balances but there is no fee for filing extensions. Your tax professional may charge a fee for preparing and filing the return for your.

Penalties and Interest

If you have a refund due to you, you do not need to file an extension for the IRS. However, many taxpayers file extensions because they don’t have all of the information available to them (or the time to do the return). One can simply enter W2 data into a return without deductions to assess a worst case scenario, but deductions can cause a significant swing in the results at the state level so it is not foolproof.

Penalties and interest apply to unpaid balances. The IRS and State Tax agencies have a host of specific penalty charges but the most severe is called the “Failure to File” penalty. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline. The failure-to-file penalty is generally more than the failure-to-pay penalty. … The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. By filing an extension, the Failure to File penalty is avoided if you need additional time to file and find that you owe.

Final Benefits

Travelers who work in the ER or outpatient clinics know what it is like to have a large number of patients arrive at the same time especially toward the end of the shift. The stress levels are higher both for the provider and the patient and it is a recipe for disaster when the temptation to cut corners emerges.

By filing an extension you will have the luxury of engaging a tax professional when they are not in a hurry. You will also be able to choose the best advisor for your needs than to settle with anyone who is available. Most preparers that are available at the deadline are more focused on volume than advising clients. For the traveler, that’s worth an extension.

Would you like to learn more?

10 Most Asked Tax Questions of Travel Nurses

Posted on February 16, 2019June 27, 2023 by Joseph Smith @ Travel Tax

This article is the third in a series of articles we’re calling “Truth in Travel Nursing.” Designed to provide reliable information to travel nurses, we hope these articles help clear up what we feel are some common misconceptions in the travel nursing profession today.

As Tax Season is upon us, we’ve prepared for you, answers to the TOP 10 Tax Questions of Travel Nurses.

The goal of a good tax preparer isn’t simply to prepare a historical document – which is the real substance of a tax return. It is their job to help the client plan for the future and find ways to reduce their tax burden going forward. With that in mind, a few of the most frequently asked questions we, as tax preparation professionals, now receive actually have dual answers!

Are you new to Travel Nursing?

Start with our Travel Nursing Guide.

By Joseph Smith @ Travel Tax

May 15, 2018

51919 Views

I Use an RV for Travel Nursing– Can I Deduct The Expenses?

Posted on May 15, 2018April 29, 2024 by Joseph Smith @ Travel Tax

Using an RV or 5th Wheel as your assignment lodging is a great way to work as a traveler. It removes the dreaded task of loading/unloading your vehicle with each assignment and having to find another apartment. Even though an RV, 5th Wheel, and Travel Trailer are similar terms, we will use the word “RV” to avoid repetition.
RVs are not cheap, and some cost more than a regular home. It’s quite an investment. Paying apartment rent at assignments is equally as expensive, and once spent, the money is gone. Unlike an RV, the place is still yours.

So…. Can you deduct your RV expenses?

If you rented an apartment at the assignment, you would deduct the expenses less any per diem you received. Since an RV is bought as a substitute for an apartment or rented home, you would think that RV expenses would also be deductible when used in the same manner.

First, let’s clear one hurdle.

To deduct ANY travel-related expense for assignments, a traveler must maintain a qualifying tax residence. Not just a permanent legal residence which is something different. A tax home is your Principal Place of income, OR when a person does not have a main place of work, their tax home can be at their principal residence if they have substantial expenses to maintain their dwelling that is duplicated when at an assignment.

Second, an RV must be a SECOND residence.

If you travel in an RV and do not maintain a job or have the main dwelling that you incur a financial burden for, we have failed the tests. Some RVers will leave behind an empty pad or vacant land and do not have a second residence for lodging. A pad or vacant land is not a dwelling.

Now that the basic stuff is covered, let’s get to our question about deducting the RV expenses.

RVs are considered a “residence” in the Tax Code

1) RVs are considered a “residence” in the Tax Code and, more specifically, a “dwelling unit.” Basically, anything that one can live in with adequate provisions for a living can rise to this level. RVs, boats, apartments, and homes are all included
in this category. Just as mortgage interest and real estate taxes are allowed as a deduction for the main residence, interest is paid on an RV and boat loan. Property taxes substitute for real estate taxes in RVs, so those payments to local governments are deductible as well.
But what about the rest of the expenses?

RVs fall under a peculiar part of the tax code

2) Since an RV is a “dwelling unit” and considered a residence, it falls under a peculiar part of the tax code (§280A ) that places specific restrictions on deductible expenses for dwelling units. Whenever one uses a dwelling for more than 14 days for personal lodging or >10% of days in which the dwelling unit is rented to other parties, deductions for the dwelling are limited to income derived from the RV or within the RV (like an office in the home) or not allowed at all.

Unfortunately, the rule in #2 answers the question that many travelers ask. It would be one thing to rent someone else’s RV on the road, but owning the RV as a residence triggers limitations that keep personal living expenses from becoming business expenses. Once you watch TV in the RV or do any personal act, you are using the RV for personal purposes as a dwelling and cannot deduct any further expenses. This is true even though you are using the RV as a second residence to deduct rent for an apartment at the assignment location normally. The ownership changes the deal.

Summary:

As a traveler using your RV as a work residence, you can deduct interest and taxes on the RV. You cannot deduct the costs of the RV nor depreciate the RV since it is used as a residence for> 14 days. As to the housing per diem, it applies to other expenses such as paying rent. Check out the TOP 10 Questions for Travel Nurses on Taxes.

References:
Jackson v Commissioner TC Memo 2014-160,
Dunford v Commissioner TC Memo 2013-189

Top 5 Tax Advantages of Travel Nursing

1.) Tax-free housing stipends

2.) Per diems for meals and incidentals

3.) Travel reimbursements

4.) Deductible work-related expenses

5.) Retirement savings opportunities

Find Your Next Travel Nurse Assignment with Our Job Board!

Discover the Perfect Housing for Your Next Assignment

Related Posts

Shoes: Which is the Best Pair For Travel Nurses?

How to Achieve a Work-Life Balance as a Travel Nurse

Becoming a Travel Nurse: Steps To Get Started

Categories

Hot Jobs

Recent Articles

Gathering your documents – the most common

W2s and 1099NEC

1099 INT, 1099DIV, 1099B

1099R, 5498

1099G

W2G

K1s

1099K

1099MISC

Tax Law Changes, Opportunities and Bummers

IRS Personal Account

Home Energy Credits

EV Credit Transfers

Beneficial ownership reporting

Related Posts

The MultiState Tax Dilemma for Travelers

Nurse Perks Revealed: Hotel and Car Rental Discounts for Maximum Savings

Travel Nurse Taxes: The Case for Extensions

Categories

Hot Jobs

Recent Articles

What is “filing exempt?”

Travel nurses file exempt for various reasons.

1) Extended period of overtime

2) Bonuses

Take Away’s

Would you like to learn more?

Related Posts

Ask A Travel Nurse: Travel Nurse Pay?

Travel Nursing With a Spouse

The MultiState Tax Dilemma for Travelers

Categories

Hot Jobs

Recent Articles

Are there new rules to consider?

There are a few things to watch as we go into a new year.

End of year planning:

New Items

*Edit

Last minute tax bills buried in appropriations bill

Changes to note

Other items to note

We hope you have a great 2020!

Related Posts

Emergency Fund for Newbies

Relief for Nursing School Loans – Forgiveness Options Part 2

Financial Challenges that Traveling Nurses Face

Categories

Hot Jobs

Recent Articles

Can I rent out my travel nurse tax home and still receive a housing stipend?

Answer:

Related Posts

Debt Free as a Travel Nurse – Tips for Paying Down Debt

The MultiState Tax Dilemma for Travelers

Taking Your First Travel Nurse Assignment During the Pandemic

Categories

Hot Jobs

Recent Articles

A traveler will eventually encounter the “50-Mile Rule” during conversations with recruiters or fellow travelers.

Let’s start with the facts:

THERE IS NO SUCH THING AS A 50-MILE RULE!

The 50 Mile Myth and the 50 Mile Reality

Agency Use of the ’50 mile Rule.’

There are only two places where there is a 50-mile rule in the tax laws.