Here to keep your feet from getting tangled in the details of multi-state employment is Joseph Smith, travel healthcare industry tax professional, with tips and advice on the most common tax issues for traveling nurses.
1. Know that you will pay taxes and file in each work state.
There are some exceptions, but in general, you pay taxes to the state you physically work in.
2. Know that you will pay taxes to your home state on ALL income.
Don’t worry, you won’t be taxed twice. Your home state will give you a credit for what you paid to the work state.
3. When negotiating contracts, remember that tax-free amounts are REIMBURSEMENTS.
You must qualify for tax-free reimbursements for lodging, meals, car and travel. If not, these should be treated as taxable income.
4. Find good tax help.
Since you’ll be working in multiple states and dealing with complicated tax law, find a tax professional who is familiar and comfortable with a mobile professional. The tax chains rarely have preparers who understand the healthcare travel industry.
5. Keep good records.
You or your tax professional will have an easier time preparing your tax return if you have good records. Keep a copy of every contract! You may need it if you get audited, or even to prove your hours to renew your healthcare license. Keep these on hand for six years. If you buy a home, the mortgage company will need a copy of your tax return for proof of income.
The best way to keep track of your assignments is to keep the following:
- A monthly employee expense log
- An assignment organizer
- A minimum mileage log
- A sheet to keep track of your trips home.