Multiple tax states

[Bluebolt]

So I'm in my first assignment and other travelers at my hospital have started giving me advice about taxes and assignments. The problem is I'm getting some conflicting information. I own a home in Alabama and receive the tax free stipend.

I'm currently working in CT and pay a very very substantial amount in taxes every week. My company pays a straight rate of $40 so no M&I included in the package and $65/hr for OT. A fellow traveler tells me to not worry about the high taxes because if I count everything involved with traveling as a deduction than I should get everything back at the end of the year.

So my question is with you fellow travelers who have been doing this for a few years, how much can you typically get back on your taxes with your traveling deductions? What do you usually count as deductions?

Also with my weekly check the state I'm working in takes out their substantial chunk of taxes. So at the end of the year do I pay the full amount of yearly income tax for my home state as well?

Sorry for all the tax questions but I figured other experienced travelers have lived and learned from the pitfalls and mistakes.

[NedRN]

For more thorough reading about taxes and deductions, I'd suggest visiting TravelTax or PanTravelers. But briefly, the way multistate taxes work is that your primary duty is to the work state. Your home state will give you a credit for taxes paid to other states but effectively after you do all the returns (yes, you must file in every work state that has income taxes as well as your home state), you will pay the amount of the higher taxing state. If you go work in a non-income tax state such as Florida, you will only owe Alabama taxes on money earned there.

Some payroll services have the capability to withhold appropriate taxes for both the work state and the home state, but this seems to be rare in travel nursing. So you may end up having to pay extra to some states at the end of the year. You can jigger your W-4 for higher withholdings, but then you are giving the government a free loan for most of the year.

You can take any of the same professional related deductions you take now, such as uniforms, licenses, work related physicals, and professional associations, education, and conferences. Specifically related to travel, you can deduct housing, mileage, per diems, licensure costs less any tax-free reimbursements that the agency "gives" you. For example, an agency may give you $600 for your round trip mileage but you actually go 4,000 miles round trip. $4,000 times 56 cents a mile is $2,240 less $600 reimbursed for a deduction of $1,640. You can also deduct the commute miles from your assignment housing to your assignment hospital.

I like to "prove" the business nature of my expenses with the agency contract primarily, and print out (usually as a pdf saved to my laptop) a Google map of an A:B route from home to hospital, and assignment housing to hospital, and save all my time sheets the same way to show how many trips I made to work. So documenting these things are not so much work and you can put all your receipts and other documents in an orderly fashion on your laptop - I also keep a very short journal showing dates of trips and adding up the deductions.

Mind you, tax-free reimbursements are much more powerful than itemizing. There are multiple thresholds to meet before you get any benefit from itemizing. Usually it is only worth it if you already itemize (usually due to mortgage interest), or receive 1099 wages. So finding a great agency is better than itemizing. This year is mostly gone, so you can start the next year with a plan to minimize both expenses and taxes!