Last week you learned about what qualifies as a “Tax Home” and what exactly is a “Tax Advantage” program. This week we will expand a bit on the topic of Tax Home and give you some information in regards to travel expenses and what constitutes as a tax deduction or whether you are eligible for tax -free travel reimbursements from your staffing company.
The first step is to determine if you do in fact have a permanent tax home (According to the IRS: “the place where you return to on a regular basis to live and work, where you incur substantial and recurring expenses”). If you do have a tax home, and you’re qualified for temporary living expense deductions, you may be able to deduct travel expenses incurred on your tax return or receive tax-free travel reimbursements from your staffing agency. This can happen only if all of your forfeitures exceed the standard deduction for your tax filing status.
Did you know that travel expenses are commonly the largest of all deductions available to traveling healthcare professionals, like travel nurses and travel allied health professionals? So what travel expenses of yours qualify for restitution?
Airline tickets are reimbursable, dollar for dollar, tax-free from your company, or fully deductable from your tax return. Most companies provide their travelers with a flat rate for travel, if you receive such payment, you must claim it as income and then subtract actual expenses to offset the income, or deduct the remainder. Another deductible travel expense is that of business mileage, but only after you’ve exceeded any payment from your employer. Daily commutes and personal mileage while on assignment are regarded as a personal expense and therefore do not qualify for deductions.
There are two ways to report vehicle expenses – the actual expenses method and the standard mileage deduction. For both, you must record all miles driven, plus business mileage including commuting and all other personal mileage. You can choose whichever deduction provides you with the biggest deduction unless you lease the car.
The actual cost expense option is exactly what it sounds like. It is the actual cost associated with using the vehicle for tax purposes for a particular tax year. Automobile expenses will include gas, tires, repairs, oil changes, registration costs, licensing, insurance and so on. In many cases, the actual expense deduction will end up being larger than the standard mileage deduction.
The standard mileage rate deduction is calculated by multiplying your total business mileage for the year by a figure provided by the IRS (55 cents per mile for business miles driven). The mileage rate is calculated to pay the whole expense of operating the vehicle. If you take this route, (no pun intended) no other vehicle expense is acceptable for deducting.
Here are a couple of resources that go deeper into travel deductions.
Next week… Do’s and Don’ts
The tax information contained on TravelNursingBlogs.com and from any communication related to this blog is for information purposes only. Please consult with your personal accountant or tax preparers for any matters concerning your own income taxes.