I am starting out on my first assignment at the end of this week (Tacoma, WA...yay!), and I was wondering what kind of record keeping I need to account for my per diem daily stipend. My company does not provide it in my paycheck, so I will be claiming it at the end of the year with my taxes. Do I need to keep the actual receipts from restaurants, or will my online bank account records be sufficient? Do I even need to worry about keeping track of meals and such, since it's usually a set rate that you claim? Should I keep a "log book" of mileage like I've read about on websites? Keeping track of every little thing I do everyday sounds like it could get old really fast!
Jul 7, '13
First things first: to be eligible to receive tax free reimbursements (or deductions), you need to be maintaining a tax home: rent, mortgage payment, or property taxes; and strong ties to the home. If not, you cannot deduct M&IE (meals and incidentals) and in fact will owe taxes on any housing and travel reimbursement received or the value of provided housing.
If you do have a valid tax home you are working away from temporarily on business, you can deduct M&IE for every day away (less a half day for the first and last day). Only half of the stated amount is allowed (see IRS tax form 2106), and it will also be subject to a filing threshold (which makes it way better if the agency reimburses you rather than deducting it - not to mention it raises your audit exposure). You do not have to document any actual expenses, just the nature of your trip, and the days away from home on business. Keeping track of your travel dates is a good thing, as is keeping a copy of your contract. I also keep copies of my time sheets, scan them and stash them on my laptop. Sometimes time sheets come in handy years later for several other things too. So it is a good practice.
Since you are already planning on itemizing, you should keep track of your mileage too. At 56.5 cents a mile, it can really add up. I use Google maps to document round trip miles from home to the assignment location, and also commute miles to the facility from the assignment housing - that is also a legitimate deduction. Here your time sheets come in handy again for documenting the number of trips to the hospital. Again, you do not need receipts or even a mileage log if you use my method for documentation. A mileage log is also acceptable to the IRS of course.
So it is a lot easier than you were picturing! Good luck on your first assignment.
Jul 7, '13
Thanks! Yeah I didn't know about the "tax home" thing until today, and I'd given up my apartment yesterday. Luckily the landlord had other apartments that the new tenant was okay with taking instead, so I'm keeping my apartment that has all my "history" (voter/car registration, bank, bills, etc.) so I can get the stipends. I was told that's a better idea than doing the itinerant nursing and having them tax everything.
Some of my other travel nursing friends have said they use their parent's houses as their address, don't pay them rent or anything, and get away with still getting all the stipends. My research seemed to think that that's frowned upon since those "three qualifications" wouldn't be met. Does the IRS just not check into that kind of stuff that often?? My parents live a state over, and I haven't lived or worked there in about 6 years, so I don't think it would work in my case anyways.
I bought a cheap mileage log book that I plan on filling out, and then a receipt book to keep track of the rent I pay (I chose the stipend and rented out a room in a townhouse).
Jul 7, '13
You don't need to keep housing receipts either for IRS purposes. Your timesheet and contract is plenty of proof that you were working away from home for the purposes of the tax free stipend.
The IRS doesn't check at all generally, unless you get audited for some other reason. That is why I mentioned audit risk - of course no one wants to go through that. You should manage your finances as if you will get audited and then you will sleep better.
Besides your random chances, and specific chances based on your return, there is also a chance that working for the wrong agency at the wrong time will also increase your audit chances. The IRS has been on a big kick auditing agencies recently, and they start by auditing a selection of their travelers to see if they can detect certain patterns to make it worthwhile to audit the agency in question. No way to know that, it would just be bad luck. Interestingly, after an agency is audited, they won't audit any more of their travelers. They prefer going after the deep pockets and so will collect any unpaid taxes from bad practices from them.
If you don't have a mortgage interest deduction, you are probably going to find that it not worth your while to itemize M&IE and mileage. If so, you probably want to choose an agency in the future that maximizes tax free reimbursements. Even if you do already itemize, working for such an agency will usually bank more money. I forgot to mention on the travel deduction, you have to subtract any agency reimbursements from your mileage total.
Jul 7, '13
How would you know if the agency does tax free reimbursements? The agency I'm talking with say they pay what they can so that the traveler does not end up having to pay taxes. It's aureus, of course, and I know you're not too fond of them. But I'm also working with another agency that has higher hourly rates. I have a home I pay on but it's on rented land. I was going to sell, but is it unwise to sell? I've already changed my address to my parents address.
Jul 7, '13
All agencies pay tax free reimbursements to most travelers. Housing for example.
Real estate decisions are part of personal tax planning as are career decisions. I don't know enough about you to even give an unqualified opinion.
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