It’s time; to file your taxes. Does this time of year give you anxiety and cause you some sleepless nights? It’s always smart to contact a tax professional for the complicated items, but here are six of the best questions and answers regarding your taxes.
1. If you’re a travel nurse, what state do you file in?
You should file in your home state and in all the states where you worked. Keep in mind it does not matter that you may not have worked in your home state. If you have legal ties to a state, you must file there. Filing correctly will ensure your professional license isn’t in jeopardy.
2. How to handle per diems?
Per diem can be distributed without receipts as long as you understand your tax home status. The per diem rates are found on the GSA.GOV website. Remember they are not the minimum or the standard amounts. Tax reform has not affected stipends and per diems.
3. What is my Tax Home?
Your tax home is your main area (not state) of work where you have significant, recurring and annual income. If you do not have a main area of income, then your tax home can be your living place (aka dwelling) where you have significant expenses keeping this home which are duplicated when temporarily away from home on assignment. If you have neither the first or second situation, you are considered itinerant and all the per diems you receive, including the value of provided housing are taxable.
4. What kind of records should I keep?
Starting with 2018 records, you will need to justify any tax-free amounts you received. Travel pay should be backed up with mileage logs, lodging allowances with proof of lodging expenses, and your contracts. This is not something to ignore; you’ll need these records for the future. All records should be kept for a minimum of seven years, but it’s never a bad idea to have them longer than necessary.
5. Can I get audited for low taxable income?
Taxes are not the avenue to get creative. The IRS will know your income-to-debt ratio when it comes to items such as your mortgage interest. If you are able to pay a high mortgage, the IRS will know you are probably getting paid more than what you’re reporting. The discrepancies are not always intentional on your part, but remember the IRS won’t see it as innocent.
6. What are the tax reforms that will affect me?
The first new reform is you can no longer deduct employee business expenses. That means that, 2000-mile drive to the new assignment and back with a capped $300 travel pay each way is no longer deductible. Going to a seminar? Not deductible any more. This will hurt a number of travelers who work for agencies that provide limited or no reimbursements on a tax-free basis.
Second, most of the states will begin adjusting their tax returns. Most states will follow the IRS changes, but some will implement their own. Understanding this will help you when the time comes to file.
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