By September 23, 2011 12 Comments

Ask a Travel Nurse: Can you shed light on travel nursing housing and tax free salary?

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travel nurse holding question mark flagAsk a Travel Nurse Question:

I spoke with a recruiter today about a job that I am seriously considering. He did inform me of the hourly wage, travel allowance, but stated that the housing would be up to me. He states that most of their nurse’s stay at extended stay hotels for about 250-300 dollars a week. He explained that their company does things this way so that the contracted nurse get a tax break and starting throwing out numbers related to tax free salary. I do say I was very confused as other agencies have offered housing. He stated that other agencies take advantage of the tax free percentage of the salary by giving you the housing. Can you shed some light on this issue. I have only completed local travel contracts and am new to the game. The agency is Trustaff…do you know anything about them?

Ask a Travel Nurse Answer:

The first question I have for you is do you have a “tax home”? A tax home is not necessarily a house, but rather, a place or area where you normally do business (you’re normally employed there, have financial ties to the community, vote in that area, have your car registered there). If you do have a qualified “tax home”, then you are able to participate in these programs, if not, their point is moot.

If you do not have a “tax home” then under the eyes of the IRS, then you have to be taxed on your housing. This holds true whether or not you take the company provided housing or just take the housing subsidy. Of course, all of this can be VERY confusing to a new traveler, but you really HAVE to understand the tax implications of using these programs. A great resource to get you started is found on Joseph Smith’s website, TravelTax.com. Joseph is an Enrolled agent who holds a federal tax license and is an all around travel tax guru. It’s a bit hard to navigate to the FAQ page, but here is a direct link:

http://traveltax.com/html/TaxEdTravelling.html

I encourage you to read EVERY little box on that page. It contains a ton of information to help you understand the tax implications of travel. He also does returns and will look at any tax advantage program for you for free (or at least last time I contacted him he said he’d still do that without charge).

While gaining more tax information is key, with what you explained, I still see issues. First, I doubt you want to stay in an extended stay hotel. Some people don’t mind them and if you REALLY need every single penny, I guess I can understand. However, I did a Phoenix assignment with my travel company and I had a condo in Ohio where I would live when I was not traveling. Since I had a “tax home”, I paid no tax on my housing (because in the eyes of the IRS, I was duplicating my living expenses while being on the road). They housed me in a gated apartment complex in a one bedroom, fully furnished unit. The complex had tennis courts, two pools (one heated), hot tubs, clubhouse, and workout facility (and this is just the typical amenities that I have on my assignments). Your housing is the place where you unwind at the end of the day. Don’t compromise on this aspect of your assignment. I think you’ll regret it.

Also, I mentioned that this housing was tax free. However, I also made extra money in my paycheck because I was participating in my company’s tax advantage program. Basically, they were giving me the IRS reimbursement that I could have just claimed on my taxes, earlier. So if you have a tax home, your housing should not be taxed and you should find extra money in your paycheck. The situation you described to me made it sound like the recruiter was representing an either/or scenario, but that might be my misunderstanding.

As for the company, I am often uncertain of what could potentially get me in hot water as far as my opinions on certain companies. I have no issue boasting about the ones I prefer, but if the case is otherwise, I prefer to “guide” people to the answers rather than giving them. With that in mind, here are a few reviews I found online:

http://www.complaintsboard.com/complaints/trustaff-c345188.html

http://www.ultimatenurse.com/forum/f7/trustaff-pns-onward-healthcare-48424/

http://www.complaintsboard.com/complaints/to-reveal-the-true-face-c148354.html

http://www.xomreviews.com/trustaff.com

http://www.merareview.com/38301/

http://www.ultimatenurse.com/forum/f7/warning-trustaff-terrible-company-work-warning-93138/

http://www.complaintsboard.com/complaints/trustaff-c412447.html

If you need any contacts for companies I trust, feel free to email me personally at david@travelnursesbible.com. I hope this helps give you some info on tax issues and also helps get you on your way regarding travel.

David
TravelNursesBible.com
david@travelnursesbible.com

First time bonus!

About the Author:

Hello everyone. I’m a travel nurse originally from Ohio who graduated in 1993 from Mount Carmel School of Nursing in Columbus. I completed a critical care fellowship at Riverside Methodist Hospital in 1994 and started traveling in that specialty a year later. My first travel assignment was in Maui and since that time I have completed close to 40 different contracts in various states with multiple travel companies.

I am the author of Travel Nurse’s Bible (A Guide to Everything on Travel Nursing), in addition to my writings here and in the pages of Travel Nursing publications such as Healthcare Traveler Magazine and American Nurse Today.

I am presently on assignment in Phoenix, AZ and travel anywhere from six to eleven months of the year.

12 Comments on "Ask a Travel Nurse: Can you shed light on travel nursing housing and tax free salary?"

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  1. Very informative. It gave me a great insight information that I can share with my other co-nurses. It will surely help us.
    Thanks!

  2. Hey Travelnursingblogs,
    Along the same lines,, If you are a nurse, you have so many opportunities in front of you. You probably are wondering what I am talking about, but just think of it. You have the opportunity to help people all over the world with your healing skills. If you are looking for a more rewarding and satisfying way to use your nursing skills, you may want to consider travel nursing. As with anything, you need to do your homework and find out if this is something that is right for you, especially if you have a family because the decision will affect all of you, not just yourself.
    Regards

  3. Dear Travel Nurse,
    I want to give an exact understanding of the tax free benefits of a Travel Nurse Job
    1. Travel expense, housing and meals are all tax free and on based on GSA per diem allowance for a particular geographic area. These are set amounts for the City and the State of employment.
    2. There is a requirement of 50 miles from your permanent residence to be eligible. Ohio requires a 100 miles.
    3. The base salary is lowered to decrease the tax implications of a Travel Job.
    4. The end result of any contract that you sign with a company, is never the gross calculated amount. Please obtain the net pay. Obtain this quote in writing immediately when quoted for a hospital position.

  4. David says:

    Being as this is a public forum, PLEASE know who you are reading before listening to any advice.

    I do not know Dr Bushansky, but he is incorrect on most all of his information posted above:

    1. Travel expense, housing and meals are all tax free and on based on GSA per diem allowance for a particular geographic area. These are set amounts for the City and the State of employment.

    These things are ONLY tax free under certain circumstances and if you do not have a valid “tax home” you could find yourself in a LOT of trouble with the IRS come tax time.

    2. There is a requirement of 50 miles from your permanent residence to be eligible. Ohio requires a 100 miles.

    There may be a requirement set forth by certain facilities or travel companies, but the IRS has no mileage stipulation when it comes to how far you must be from your perm. residence. This is a direct quote from Joseph Smith’s site, traveltax.com. He is an enrolled agent with the IRS and specializes in traveling healthcare tax returns:

    50 Mile Rule

    Sorry, there is none. Nope! Nada! It is the equivalent of an urban myth.

    According to IRS pub 463 a job is far enough away if “you need to sleep or rest to meet the demands of your work while away from home.” If that rest takes place on your own pillow, in your own bed, while it remains in your tax home, you are not away from home.

    The origin of this “ 50 mile rule” is based on a threefold series of misunderstandings. #1- There is a fifty mile marker used for state legislators to determine if they are “away from home.” #2- The IRS has a requirement of a new job commute needing to be 50 miles further than the old job commute before moving deductions are allowed. #3- Many companies and agencies have utilized this arbitrary number as an internal policy rule for so long that everyone assumes that it is an IRS regulation.

    3. The base salary is lowered to decrease the tax implications of a Travel Job.

    This can be true, but again, only in certain circumstances that need to be fully understood by the traveler. If you accept an assignment with a base salary too far below IRS expectations, “tax home” or not, you might be asking for an audit.

    4. The end result of any contract that you sign with a company, is never the gross calculated amount. Please obtain the net pay. Obtain this quote in writing immediately when quoted for a hospital position.

    I have been a traveler for over a decade and a half. I have NEVER had a travel company quote me the “net pay”. There are too many variables involved….fed tax, state tax, workers comp, health insurance options….how is any company going to be able to tell you exactly how much you will bring home?

    I’m a traveler with over sixteen years experience, but even I am not an expert when it comes to tax issues. However, I could not let the comments by Dr Bushansky potentially cause a traveler a lot of liability issues when it comes tax time.

    The real expert when it comes to this sort of thing is Joseph Smith (mentioned in the article above). He also notes on his website that “questions” are always free.

  5. Kathleen Mess

    says:

    I gave up my apartment and utilities because I pretty much trVel.year round. The agency deducts 350-460 out of my check each week as tax housing deduction. How will this work when I file my taxes ?

  6. David says:

    Hey Kathleen. I’m not sure I understand your question, but I’m also not sure that I would be the one to ask even after a clarification.

    How will this be reported from the travel company? That would be a question for your company.

    How do you file this on your taxes? That would be a question for you tax preparer.

    Do you need to report this on your taxes? Do you get a deduction for this? Again, all questions for your tax preparer.

    If you have tax specific questions, try posing a question to the staff over at traveltax.com. They work with traveling healthcare professionals and do offer to answer questions for free. But do realize as it gets closer to April, the longer it will likely take for them to get back to you.

    Sorry I could not be of more direct help. Even though I don’t understand what you are asking, I’m fairly certain there are people better than I to provide a response.

    David
    david@travelnursesbible.com

  7. Stephanie Loudermilk

    says:

    I am a travel nurse with a permanent tax home in Indiana who travels to California every winter to work. When I filed my taxes it showed that I owed $955.00 in state taxes to Indiana. This did not make sense to me because I was under the impression that if you have a permanent tax home then you were obligated to receive the tax free stipend money without being taxed. I will get back $1400 in federal tax money. If you could respond and explain to me the logistics behind all of this I would be grateful. Thank you.

  8. David says:

    Hello Stephanie. I would never be able to answer your question without fully understanding your tax situation. The are a ton of variables involved in travel nursing and not understanding just one aspect could produce issues like the one with which you have been presented.

    I suspect it could pertain to how you filed in regard to a part-year or full year resident, but again, there is a lot more info needed to make an informed response.

    Add to that, that I am not a tax professional and would always defer to someone who knows the current tax laws inside and out. The best advise I can give is to reach out to the guys over at traveltax.com. This is Joseph Smith’s website and he is sort of the “go-to-guy” in regard to taxes and the traveling healthcare professional.

    Even then, you may need to provide him with your full return and additional information to decipher the problem. I do not know how much they charge to review a return, but from the professionalism I have seen from them, they would be your best bet in securing a correct return, an explanation for your situation, and a plan for helping you to avoid any further tax issues.

    I hope this helps.

    David

  9. Alycia

    says:

    Hi David,

    My husband and I are considering embarking with our family (3 1/2 year old daughter and our 9 year old Pug) on the travel nurse journey. Could you please private message me with a list of your preferred agencies to work with/for? There are so many to look up and choose from and with your experience I am hoping to narrow the choices down to the best ones.

    Thank you!

    – Alycia

  10. David says:

    Hey Alycia. I sent you an email outlining the way I pair travel nurses with great recruiters to assist them in getting started. If you do not receive that email, please feel free to reach out to me directly at david@travelnursesbible.com

    David

  11. Kelli

    says:

    Hey, to add on to this thread. If you are keeping a tax home while traveling, how much to do you need to pay each month? If I’m using my parents home as my tax home, could I just help with utilities each month or would I need to pay a portion of their mortgage? And if you don’t pay rent in the tax home and are audited, do you know what that process would look like and how they might calculate what you would owe? Hope these questions make sense. Thanks for your insight 🙂

  12. David says:

    Hey Kelli. While not a tax specialist, I can tell you what I have come to learn about taxes and the travel nurse.

    Because you mentioned keeping a tax home by paying rent, I need to be sure you are aware of the definition of a tax home (per the IRS).

    Per IRS Publication 463:

    Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.

    So, in the eyes of the IRS, just maintaining a “dwelling” (having a home or paying rent), may not always satisfy all the requirements of having a tax home.

    To answer your first question, the amount of rent you pay has to be “fair market value”, meaning, what your parents might charge anyone else to rent your room, or what similar rooms in the area might cost.

    You will also want to have a paper trail to prove duplication of expenses. The best ways to do this are by paying your parents by check, instead of cash, and ideally, having a written rental agreement.

    To answer your next question, we can look back at IRS 463 to see what factors are used to determine tax home:

    “If you don’t have a regular or main place of business or work, use the following three factors to determine where your tax home is.

    1. You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.
    2. You have living expenses at your main home that you duplicate because your business requires you to be away from that home.
    3. You haven’t abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging.

    If you satisfy all three factors, your tax home is the home where you regularly live. If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you can’t deduct travel expenses.”

    So, if you are only paying utilities, you are probably not satisfying #2 because you are not really paying “living” expenses. Additionally, if you are not returning to the area and using the room in your parents house for lodging, then you may also not be satisfying #1. In other words, I would go the distance in doing everything possible to insure I had a tax home (paying fair market rent and not just utilities).

    Only the IRS would know for sure what an audit would “look like”, but I imagine “pretty ugly” would be an accurate description. A CPA could give some insight into the process you may have to follow in an audit, but even then, they would only be working with hypothetical numbers. True numbers would only come after the IRS determines the amount of time you were not in compliance, the dollar amount upon which you owed taxes, and the penalty they may assess for length of time or dollar amount of the infraction.

    It would be a good idea to read over IRS Publication 463 which can be found here:

    https://www.irs.gov/publications/p463#en_US_2016_publink100033754

    Additionally, you should read the entire FAQ page over at traveltax.com which can be found here:

    http://traveltax.com/traveler.html

    Traveltax.com is the company of Joseph Smith, a well known tax figure in the travel world. He is an enrolled agent with the IRS (sort of a “next level” tax guy) and is very familiar with the tax laws concerning traveling healthcare professionals.

    Before publication, I asked Joseph to proof read the chapter on taxes in my book. Additionally, I often cite the aforementioned webpage on his site as REQUIRED reading for any traveler.

    The staff over at traveltax.com also answer questions submitted via their website, so you could pose the same question of them.

    I hope this helps.

    David
    david@travelnursesbible.com

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