The month of April is usually met with renewed spirits as spring begins to bloom and everything suddenly feels fresh and new again. Unfortunately, April also contains the single most hated day of the year… Tax Day! Whether you are doing your taxes by yourself or hiring a professional, tax time is never very much fun, especially for travel nurses and therapists. Here are a few important considerations to help you make it through filing with a minimum amount of pain and suffering.
- File an Extension: If you are completely unprepared to file your taxes by Monday, April 15th, you can file an extension to give yourself a little more time to prepare. An extension allows you time to get all of your information organized. Keep in mind, if you expect to owe money, you should estimate what you owe and send in a payment with your extension. Failure to do so may cause you to accrue a penalty for each month you don’t pay.
- Determine Your Tax Home: Travelers often receive compensation for transportation, lodging, meals, etc. because they are working away from their tax home. This compensation is typically tax-free because the traveler still incurs costs to maintain their tax home. What is a tax home, you ask? Let’s clear it up.
- Tax Home: Typically referred to as the home you return to regularly and the place where you incur regular, substantial expenses. It is also the place where you probably have your driver’s license, car registration, normal mail delivery, etc. You can substantiate your tax home through mortgage payments, utility payments, and other costs that are paid whether you are physically in the home or not.
- Permanent Residence: If a traveler does not have to bear the costs of a tax home, they probably reside in what is considered a permanent residence. This residence is where the traveler lives, but does not have to pay regular or substantial expenses. For example, if the traveler lives with their parents when not on assignment and isn’t charged rent or upkeep. This living situation is a residence and not a tax home.
- Understand Your State Tax Responsibilities: Chances are that you have worked in multiple states throughout the year, each with a different tax requirement. Some, like Texas, Florida, and others have no state income tax. Knowing state tax information is part of your filing responsibilities.
- Save Every Receipt: Travel nurses and therapists, like anyone who gets reimbursed for travel expenses, have to retain and organize their receipts. From meals, gas, and utilities, to any other expense that a traveler plans to include in their tax return, keeping them organized is critical to avoiding a tax-time migraine. Some travelers use a shoe box and save hard copies while others use an app on their smartphone and scan every receipt.
- Save Your Travel Contracts: Stay in the habit of keeping each contract you work in case it is needed come tax time. Depending on the contract, there may be important information that you will need when it is time to file.
- Hire a Tax Professional: Just like you wouldn’t want an accountant responsible for doing a blood draw on you, it may be wise to let the professionals handle your taxes. Sometimes it can be quite costly to hire a tax preparer, but depending on your comfort level with your own personal tax situation, it may be a worthy investment.
We want to hear from you! What are your best tax time tips for your fellow travelers? Leave us a comment below or join the discussion on our Facebook page.