I am going to be taking my first travel position and need some help understanding what they are quoting me. Originally they offered me $33.00 per hour and then when I received the contract it was quoted as $23.00 per hour (taxed) and $410.00 per week that would be untaxed. I am having a difficult time deciphering if this is a good deal or not? (Also included is housing at an extended stay hotel, license reimbursement-$200, and $300 transportation bonus) I would greatly appreciate some help with how the tax free money thing works.
Ask a Travel Nurse Answer:
Sorry it took me so long to answer your question. I wanted to review things with my tax resource, Joseph Smith, before responding. I do so because I went to nursing school to avoid mathematics and all those tax calculations make my head hurt.
I suppose the first thing I should say is that I am not a tax professional, so I will not attempt to give tax advice. I’ll tell you a bit more about Joseph at the end of this email and perhaps you would like to contact him. However, I can tell you what I know and maybe that will be enough to help you decide.
First, I am hoping that someone has described to you, in depth, the qualifications you must have in order to participate in a tax advantage program. The primary reason anyone is able to participate in a tax advantage program is because they are working away from their “tax home” and duplicating their living expenses by doing so. A “tax home” is typically a dwelling where a traveler resides when they are not traveling, pays rent or contributes substantial monies to the dwelling’ upkeep or maintenance, and has established ties to the community surrounding the dwelling (the dwelling is where you are registered to vote or the address you use for bank accounts and car registrations are examples).
Many times your travel company will have a questionnaire to help you determine whether or not you qualify for their tax advantage program. Be careful about companies who encourage you to just use your parents home as your tax home as it may not always qualify. As you can see, nothing is very cut and dry when it concerns taxes.
In my book I dedicate an entire chapter to taxes for the travel nurse (which Joseph thankfully reviewed before I published). So I will not go into all of that in my response, but let’s just assume that you are qualified to participate in the tax advantage program your company offers. Joseph suggested looking at the entire 13-week contract is better, but indicated that when quoted this way, you could take the weekly amount and divide it by the contracted hours. So if you are working 36 hours a week, divide the weekly reimbursement of $410 by 36 which equals $11.38. In other words, you would see about an $11.38 difference in the hourly rate you were quoted and the rate reflected on the contract.
If you have questions on how your company calculates these figures, it’s best to speak with someone at your company in the payroll department. Your recruiter many be able to give you some insight, but I have heard many a tale of recruiters becoming frustrated while trying to explain the tax advantage program of their company. I believe the reason for this is that they themselves often do not understand the intricacies of the company’s tax program. It is quite possibly the hardest thing you will have to deal with when reviewing your travel contract.
Always be on the lookout for rates quoted to you that seem ridiculously low. If your hourly rate on your contract ever dips to the low teens, I would question the legality of the tax advantage program (you have to be earning a reasonable rate for an RN no matter how they structure the program). Joseph Smith, who I mentioned before, used to be a traveler himself, and now does tax returns for many traveling professionals. He confirmed that he still looks at any tax advantage program for free. His website also has quite a bit of information posted on tax advantage programs and what qualifies as a “tax home”. His site can be found at http://www.traveltax.com/
I prefer not to talk specific tax issues too much because each situation is different. However, I hope I have given you enough here to help and if not, please do not hesitate to contact Joseph (the REAL tax expert)