Address while away

NedRN · Mar 19, 2014

For tax purposes, you have a choice between being itinerant (without a home) and working away from your tax home. If you are itinerant, everywhere you are is "home" so you cannot collect tax benefits of expenses of working away from home. You are just like local staff for tax purposes. There are no travel expense deductions (or non-taxed agency reimbursements), and similarly for housing and per diems. You must tell your agency that you are itinerant and that all compensation must be taxed (items that don't have to be include licensing, certifications, and uniforms: professional costs).

On the plus side, you have no tax home to maintain: no duplication of rent, mortgage, or utilities. Often you come out ahead financially, and there is a lot less to manage and worry about.

Either way of course, you do need an address and having your parents manage mail is ideal. You may be able to convert your parent's address to a tax home if you pay rent and have a room for your exclusive use that you can return to at any time. Tax homes can get complicated and this is the best time for you to learn more before you start traveling. Lots of detail available at sites like PanTravelers and TravelTax, rely on what they say over agency recruiters who are not tax experts. Just for an FYI, the tax benefit of having a tax home is about $10,000 to $12,000 a year for most travelers: that is the amount extra that you can put into the bank. Less your expenses of maintaining your tax home of course.

Purchasing a home can pay off since money paid towards your mortgage increases your equity, instead of a total loss like rent. Like any investment, it also has the potential to go up or down in value. But if you think you can at least come out even on such a large purchase in the long run, you will be better off financially from traveling. One more really big thing to consider!

Finally, if you purchase such a home in compact state, you will reduce your cost of traveling (the licensure cost) of going to other compact states, and the hassle and time constraints of licensure to such states.

Zjinn · Mar 21, 2014

When my wife and I started traveling, we didn't want a home to have to worry about so we sold our home. Our initial plan was to use our daughter's address to receive mail and claim as a tax home. Thankfully we have a really good accountant, who specializes in full-time travelers. He talked us out of that in a hurry.

He said we would need to be paying year-round, fair market value rent to our daughter, to be able to claim her home as a tax home. Even then it could be up to the judgement of the IRS whether we qualified for a tax home, should we be audited. He did a total cost comparison of what we would spend with and without a rental tax home. Ned's figures are really close to what our breakdown was. Which for us meant that unless we were going to be spending a significant amount of time "at home," it didn't make financial sense for us to pay rent somewhere. If we would have paid rent in our area, plus at least a couple of trips home per year, we would have exceeded the tax savings we would have received from having a tax home.

Now for how we did it. South Dakota is a compact nursing state, with no state income tax. It is also the only state in the country that you can become a resident of by spending one night there. We have a mail forwarding company that we pay ~$200 a year to in Rapid City, SD. When we where ready to start traveling, we drove up to SD and signed up with the mail forwarding company. We then spent the night in the hotel across the street, took our hotel receipt (to prove that we had spent the night in the state) and our new SD address to the DMV the next morning and we were officially residents of SD. The guy at the DMV laughed and asked if were were RVers. SD is also the #1 state for full-time RVers to claim as home (for many of the same reasons it's so great for travel nurses). While were were there, we tagged our new truck for just a few dollars and got our SD compact nursing license.

Now we own a home in CA and we pay CA taxes for half a year, since we spend much of our time out here. We still keep our mail-forwarding address in SD, so we can claim SD as home though. That way we keep our compact license and I can still tag our vehicles in SD. My SD tags and vehicle taxes are around 10% of what they would be in CA. And we don't even have to take them to SD. We haven't been back there in over 3 years. They're so travel-friendly that you can do any state or county business by phone and mail.

NedRN · Mar 21, 2014

It would be wise if you changed your practices now. You clearly have a tax home in California and you need to pay taxes as a resident. California is much more aggressive than the IRS and will go back and assess back taxes and penalties. Their agencies talk to each other so your home ownership will eventually catch up to you. A few years ago, California sent me a tax bill based on my current state nurse license even though I didn't work there that year. If you get audited by any tax agency for any reason, it will be game over. I'd get another consult with your tax guy and run all this by him. Yes, it will cost you, you will owe taxes to California year round (less taxes paid to work states).

California makes it expensive to own a car and a good number of Californians with a connection to another state register them out of state. This is illegal and California is aggressive here too. Every time I visit, I see billboards with 800 number encouraging reporting of out of state cars parked in neighborhoods. I assume it is expensive if you get caught. Regular travelers often have difficulty at traffic stops. A good practice (at least for out of state travelers) is to keep a copy of your travel contract in your car to prove to police that your are there working temporarily.

The above is just money so you can buy your way out if you get caught. A more serious issue is your compact license. You don't need a tax home in SD to be eligible for a compact license there, but it is my belief you are not eligible as you really reside in another state. If you get reported to a board for any reason, you could be charged for practicing without a license. This has the potential to be a felony and even if not, you may lose all your licenses forever. That is not worth the risk. Drop your SD license, or convert it to single state if you plan to work there.

I suspect this happens fairly often, often enough that I have actually seen a recent report in a traveler forum. Texas of course, traveler reported for something trivial and this came up and it was determined by Texas and the home state that the license was not valid. Definitely not worth it for the relatively trivial cost and hassle of getting single state licenses as you need them when you go to compact states.

Zjinn · Mar 22, 2014

I appreciate the concern, but hopefully you can see from my previous posts that I'm very conscientious about making sure we are above board and legal in all our decisions. We are 100% legal residents of SD. I've seen you get a little overzealous in your responses to other people and telling me I'm doing something illegal is way beyond overzealous.

We still owned our home in another state when we became residents of SD. The state of SD, the SD BoN, and the BoN of our home state at the time, were all aware of that and what our plans were. Owning a home somewhere does not automatically make you a resident there. In the past 25+ years, we have owned owned homes in several states which we were not residents.

We also own a home in Mexico, and that most certainly does not make us citizens of Mexico. We have very few rights in Mexico, even as homeowners. The home in California is considered a vacation home and while we do spend a lot of time there, it's not enough to warrant residency. What makes you a resident of a state is fulfilling the requirements of residency for that particular state. SD happens to be really easy and very beneficial for travelers. While it's my understanding that it was originally set up that way for retired RVers, it also happens to be excellent for travel nurses.

I apologize to the original poster, for this becoming a thread hijack. My original post was to show a valid way to address the "Address while away" concerns. This advice comes with extensive research ahead of time, which included very expensive legal advice, as well as several years of actual practice. Hopefully there are some helpful bits of knowledge, even in the hijacked part.

NedRN · Mar 22, 2014

Again, I would urge you to check with your tax advisor. You can set up an address of convenience anywhere but having no physical presence of any sort in a state, nor even visiting, does not make it a tax home. You cannot by any stretch of the imagination have a vacation home where you spend half the year without having another home. You say you have a home in Mexico. Do you claim that as your tax home?

To claim business expenses (or accept such reimbursements from an agency), you must be traveling temporarily away from your home. Exactly how are you meeting that basic requirement?

But beyond that financial issue again, the compact license issue is more important. Yes, you can get a compact license with an address of convenience, but not if you reside in another state. When you originally obtained your license, it may have been legitimately a compact license, but that is not the case now.

From the NLC FAQ:

Only nurses who declare a compact state as their primary state of residence are eligible for a multistate license. As a resident of a noncompact state, you may apply for a license in a compact state, although your eligibility will be limited to a single state license that is valid in that state only.

Declaring a state to be your primary state of residence when you don't live there and spend half the year in a house you own in California does not make it so. If it did, every traveler would do just what you did, and the residency requirement would be pointless.

Zjinn · Mar 22, 2014

Without becoming argumentative, I can tell you that you have stepped outside of your expertise in this area. Yes, I can own a vacation home in CA as well as one in Mexico, without claiming either as my residency or my tax home. Yes, I can be a resident of SD, without owning a home there. Yes, I am a legal resident of SD and therefore able to use my SD nursing license as my compact license. As with anything else I do, I did not venture into travel nursing lightly. It was through much research and legal advice.

We take one regular contract and one short contract per year, in the area we own a home in CA, which is not a tax home. We are transient workers and do not claim a tax home. That officially puts us in CA less than six months in a calendar year, which is the requirement for residency in CA. We pay income taxes to CA as well as any other state we work in, but we save any other income taxes we would normally owe, because SD has no income tax.

You do have a lot of knowledge about travel nursing, I don't anyone here will dispute that. I'm not sure if where you're coming from on this particular subject though. I'm speaking from years of experience and sound legal advice, not my own interpretation of snippets from the internet.

NedRN · Mar 22, 2014

So you believe you are itinerant and pay state and federal taxes on all your compensation including housing? That is a much stronger argument. I was led to believe from your posts that you were claiming SD as your tax home and my comments were on that basis. I'm not sure how this would play out in an audit, or if you are reported to a BON for any reason. You might end up OK, but you are certainly on the aggressive end of scale.

I certainly admit that I'm not an expert when it comes to multiple residences and tax homes (nor are there very many tax advisors I would trust with such questions), but I think the costs of giving up your compact license are trivial when compared to the risks if you work in compact states. The costs of most state licenses are under $200 and are tax deductible as a professional expense. Even if you judge that the risks of being found practicing without a license from a address of convenience state is low, it is not zero.

It is certainly your choice and your comfort level with the risk, real or perceived. So I'll get off your case, but I think this discussion is valuable either way for others to read. I do applaud your research before acting and paying taxes as an itinerant traveler. Many travelers simply move out of their lodgings, take their parent's address as a convenience, and believe their recruiters that it is fine to accept tax-free housing.

Zjinn · Mar 22, 2014

While I can appreciate you wanting clarification, your responses can be deemed very aggressive, and accusing someone of doing something illegal is definitely not a way to win influence. If this were the first post you had done that in, or I the first person to receive this kind of response, I may have let it pass. Even your concession comes across as condescending. I most certainly do not come here looking for an argument, but I will defend myself. The way I do things may not be conventional, but they are valid and legal.

Since you reference both TravelTax and PanTravelers quite often, we know many of the same people. In fact, we've probably met at one the PanTravelers conventions. We try to make it to one at least every couple of years. My wife never passes up a chance to go to Las Vegas. Much of what I have learned and my practice as a traveler has come from sessions during those conventions.

I think we're both here for the same reasons. To pass along some of the things we've learned along the way. There is room for more than your way of doing things though.

NedRN · Mar 22, 2014

You no doubt have a different meaning in mind, but my recommendations are conservative, not aggressive. That is what is needed by the vast majority of people seeking information. My goal is to provide information and help keep fellow travelers safe. Strategies such as you are implementing do need a counterpoint. I'm not apologizing for providing such counterpoint, again, I believe others need to see both sides. There certainly are nurses who have lost their ability to practice with addresses of convenience in compact states.

I've only been to two conferences, this last one and the first one. I led the workshops on negotiation in the last one. I was diplomatic enough that only a couple agency sponsors complained! If Traveltax is your advisor, you are probably on safe ground when it comes to taxes.

BD-RN, BSN, RN · Mar 23, 2014

My understanding of claiming a tax home from an accountant who specializes in this (I think you just good "travel nurse tax" or something to that affect and his site comes up, then you click on the FAQ's). You have to meet 2 of 3 criteria to claim a tax home.

1) You have an address at a residence you can and do return to at any time on a regular basis (meaning you can't sublet it or rent it out)

2) You financially maintain this residence (mortgage, rent, utilities)

3) you earn income from this residence

They give examples; one of which is let's I still have a room in my mother's house. I can and do return there regularly, and claim that as my legal residence. There is no mortgage, and my mom does not charge me rent when I'm not there, though she maintains my room as MY room. While I do have a cell phone with the bill listed at that address, it's not a utility. BUT let's say I take a couple months a year off from traveling, go home and work registry or per diem. I have now met 2 of the 3 criteria, and can legally claim my mother's home as my tax home. Now if my mom charges me rent continually (at a fair market rate) while I was away I would not have to make sure I take a month or so off a year to go work from home.

Another example of compact licences: I was originally licensed by the NC BON; since I was living there and went to school there. However, my permanent address is in California, a non compact state. I therefore doNOT have a multistate license, and must apply for a license by endorsement in EVERY state I work in, even though I hold a valid active license in a compact state. Also, if you permanently move to another state (let's say I had a multistate license in NC and then permanently moved to CO), you STILL have to apply for a license by endorsement in that state if you reside there. The exception? Let's say you work in southern VA but reside in northern NC; every day you drive across the state line to work. You still RESIDE in NC, therefore can use your compact license to work in VA. It's all very very complicated, I know. This is a learn-as-you-go business :)

NedRN · Mar 23, 2014

Your tax home description is accurate as far as you can go in several paragraphs. TravelTax is big on fair market rent, I think that overstates it. If you get a bargain that is below market rate, you are not required to pay more to solidify your tax home status. There is also quid pro quo, not everything has a dollar value. You may provide aid or companionship to your mother when at home for example and that may make it worthwhile for her to keep your room available for your use year round. Suddenly moving home when you start to travel would probably require something like fair market rent though. But if it has been your historical home, keeping it would be fine. There are things that are black and white, and others that are more about a preponderance of evidence.

You also have the basics of compact licensure down well. I believe you have a grace period when moving during which you can use your existing compact licensure for a month or so while you apply for reciprocity in another compact state. Just like a tax home, intent is important as well. You can take a travel assignment in CO but at the point when you decide to make it permanent, you need to get a CO license. While the BON is not so concerned with the concept of tax home, since that shifts to the work state after you have worked a year, even if you are a traveler still, that would probably mean it is considered your residence for licensure purposes as well. I certainly would want to get opinions from the two BONs in writing at a minimum to protect yourself if you keep your original compact license over a year in a different compact state. Commuting across a state border as you describe is a different situation.