Published Apr 10, 2014
I'm considering travel nursing and will not have a tax home nor do I plan to "arrange" a tax home. Are the taxes on the housing, etc provided by the agency really that bad? Will I end up owing more in taxes than the money I bring home??
I'm not looking into travel nursing for a pay raise necessarily but rather for the experience and chance to travel.
Yes, you will owe federal and state income taxes on all your compensation including housing costs, just as you "enjoy" now. It has never been possible in the United States to pay more taxes than you earn, most likely your "visible" taxation (withholding taxes on your check) will max out at about 35 percent. If your agency provides actual housing rather than a housing stipend, your apparent tax percentage may be somewhat higher, but I think you will still have movie money.
I am currently on my first travel assignment. I recently met a traveler I work with who has used her parent's address as her tax home and has still been able to get the tax free money without having to pay taxes on it later. Use a family member's address and you should be fine.
Agreed. If a tax home was as simple as using a relative's or friend's address, everyone would be paying less taxes. Recruiters will tell you to do that, but they will not be sitting in your audit, or paying your back taxes, penalties, and interest.
The traveler I am speaking about has been traveling for 6 years and using her parent's address. She has had no problems from the IRS. Just the facts, ma'am.
Nor will she until she gets audited. Just the facts, sir.
What's the difference between using your parents address and using that of an apartment you live in by yourself? Not trying to be snooty, but I'm about to begin my first assignment this summer and this is an important question for me.
When you go on a business trip, you incur "replacement" expenses that you wouldn't have at home. These expenses include housing, travel, and per diems (meal subsidy since presumably away from your kitchen you will have to eat out more). The IRS allows you to deduct these business expenses when legitimately working away from your home or usual place of business. Alternatively, a company can "reimburse" you for these expenses without withholding taxes. The agency doesn't need receipts if they do minimal due diligence to confirm that you are working away from a tax home as long and they don't exceed published GSA tables on allowable per diems per location.
If you are using a fictitious address that you don't live at, pay rent or mortgage, or return to regularly, you are actually itinerant per IRS definition (without a home). This means that everywhere you work is your home, thus you are not eligible for special tax treatment of expenses incurred working away from home - because you are not!
There are tons of implications and fine points associated with accepting so-called Tax Advantage from an agency and you will find lots of content on PanTravelers and TravelTax about tax homes. Here is the bottom line though, a tax home is worth about 10 to 12 thousand a year in extra take home pay for a typical full time traveler. That is the number you need to compare to the cost of maintaining a tax home - think rent and utilities. It is possible that being itinerant will save you money, depending on your cost basis. But if you own a home, or share an apartment or house, you may do significantly better by maintaining a tax home.
I was told by my financial advisor that if I plan to stay somewhere a couple of days a month at home then I can claim it as a tax home. I, also, stayed at my originally job so this works out for me to come back a couple of days a month and work there. I suggest doing it as honestly as possible, because even though people get away with it-the damning effects are AWFUL! Good luck to ya!
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