Tax deductions

suzanne4, RN · Aug 15, 2005

If you are living in that area and do not have another tax residence, then no you are not entitled to any of those perks. How you get paid has nothing to do with this.

Best suggestion is for you to consult a tax professional, we cannot offer tax advice here, no moe than we can offer medical advice.

degurski · Aug 15, 2005

Hi!
You're probably wondering why I have tax questions in August! I have an extension until October. My question is this - does anyone have any good tax deduction suggestions. I am kind of like an agency nurse but I work for the hospital but sign a 13 week contract each time. I don't know if I am eligible for some of the deductions that travellers are eligible for. Not sure who to go to for information. Wasn't really able to find anything when I "googled". Any help would be appreciated. Thanks!

I would recommend a good accountant. It'll cost some money, but money well spent in my opinion. It's their job to be up-to-date all on that incredibly detailed and boring tax stuff! :)

nanbo · Aug 15, 2005

I would recommend a good accountant. It'll cost some money, but money well spent in my opinion. It's their job to be up-to-date all on that incredibly detailed and boring tax stuff! :)

I guess I knew that! I've just never had to use an accountant before. Thanks!

nanbo · Aug 15, 2005

If you are living in that area and do not have another tax residence, then no you are not entitled to any of those perks. How you get paid has nothing to do with this.
Best suggestion is for you to consult a tax professional, we cannot offer tax advice here, no moe than we can offer medical advice.

I do have another tax residence (will now have two) and I didn't mention anything about how I get paid. I am not looking for "perks". I was not looking for tax "advice" merely a question that was apparently not well received.

Editorial Team / Admin · Aug 15, 2005

Hi!
You're probably wondering why I have tax questions in August! I have an extension until October. My question is this - does anyone have any good tax deduction suggestions. I am kind of like an agency nurse but I work for the hospital but sign a 13 week contract each time. I don't know if I am eligible for some of the deductions that travellers are eligible for. Not sure who to go to for information. Wasn't really able to find anything when I "googled". Any help would be appreciated. Thanks!

try an accountant and/or a financial advisor/planner. They are not the same. Sometimes nurses have to find ways to defer some of their income into tax-exempt areas. The advisor/planner can suggest how to diversify.

Hope this helps a little and good luck!!

nanbo · Aug 15, 2005

Thanks for the advice, I appreciate it. Have considered a financial advisor.

Have a wonderful day!

suzanne4, RN · Aug 15, 2005

I do have another tax residence (will now have two) and I didn't mention anything about how I get paid. I am not looking for "perks". I was not looking for tax "advice" merely a question that was apparently not well received.

Sorry if you took my answer the wrong way, but you brought up the travel issue and their are certain perks, or I shoudl call them tax benefits that go along with it if you have a permanent tax residence. This is why we are suggesting to speak to a tax person in your state. There are way too many things to get into.

You actually will only have one tax residence as far as taxes are concerned.

You only have one permanent address listed as where you vote, have your driver's license listed, etc. Paying rent on a second place is not a tax residence. Even if you own a second vacation home in another area, that is not a tax residence as far as taxes go. All of this is very new to you, that is why we are making the suggestions that we are. There is quite a bit that you need to learn. You will be able to save yourself some money that way, but you need a thorough understanding of it.

And as I have stated to you already, we cannot offer tax advice here. We are a nursing bulletin board, and do not offer medical advice here either. It is against the TOS of the site.

HarryHK · Aug 16, 2005

As a specialized industry, there are not too many tax people that can give correct advice to travel nurses (this is related to agency NURSING profession Suzanne). I certainly cannot give you advice either, not knowing your situation. I can, however, give you information about specific deductions that travel nurses with a tax home as defined by the IRS may take and how to do it. Again, well within the parameters of discussion of the nursing profession.

First, you need an established tax home that you intend to return to, have ongoing expenses and ties to, and are not renting while you are gone. You also may not take a single assignment that lasts more than one year but you may take several. And to be eligible for traveling deductions, your assignment must require an overnight stay (too far to commute from your tax home).

When working away from home, you are entitled to deduct all expenses related to working away from home. This includes mileage at 40.5 cents a mile (or actual costs) to and from the assignment location, and to and from your temporary housing to the facility. You may deduct actual housing costs. This includes funishings, utilities, hotels along the way, phone, cable, (basically anything that you are "replacing" that you have at home), mailing/fax costs to agency and/or your bank, CEUs, certifications, licenses related this assignment. You get the idea.

Another large item is meals and incidentals. You may deduct either 50% of your actual costs away from home, or 50% of the amount found on irs.gov (do a search for Publication 1542). Using these tables is almost always a better deal and you don't have to keep receipts. On the order of $40 a day away from home (you may only deduct half the first and last day of travel).

With all these deductions, you must document the business reason for the trip and keep logs and receipts of activities and purchases. For example, your daily trip to the hospital will not change. Document that mileage once (I prefer doing it with something objective like MapQuest - then there can be no dispute), and then use your schedule to document number of trips.

To the extent that your agency is providing housing, reimbursing meals and incidentals (also commonly called per diems), travel and other expenses, you must subtract those against what is allowed, or that you have receipts for.

So that is the good news! I'm sure you are calculating the amounts now! The bad news is that you must itemize. If you don't, it is unlikely going to be worth your while. And even so, there are still a few more hurdles. You will have to add a Form 2106 to your return (not such a big deal in of itself). But first, all your business deductions must be at least 2% of your AGI (adjusted gross income) and then only the amounts OVER that 2% may be deducted. And that's a killer! Still worth it if it comes out positive of course.

But it shows the advantage to working for a good agency that does it on the front side. While you may only deduct 50% of meals, that per diem they pay you (if they do "tax advantage") is fully yours tax free. Same with other reimbursements. You can usually do better with a good agency rather than taking all your money as wages and deducting expenses on the back end.

There are tax professionals that specialize in traveler taxes.

Hope this helps and good luck!

dreamlandeals · Aug 16, 2005

Very True

eddy · Aug 26, 2005

Hi!
You're probably wondering why I have tax questions in August! I have an extension until October. My question is this - does anyone have any good tax deduction suggestions. I am kind of like an agency nurse but I work for the hospital but sign a 13 week contract each time. I don't know if I am eligible for some of the deductions that travellers are eligible for. Not sure who to go to for information. Wasn't really able to find anything when I "googled". Any help would be appreciated. Thanks!

As a past (and somewhat still) tax accountant, I highly suggest you speak with a local tax professional who specializes in SMALL BUSINESS tax accounting. You ARE a small business as a contractor and need to have an appropriate tax strategy for it. There are a lot of things you can do to save on taxes as well as defer taxes to a later date, but you really need to have a sit down with a professional. Additionally, you may be non-compliant with the IRS if you are earning enough money to require quarterly estimated tax deposits and currently are only paying taxes in April. A 2 hour consultation should cost you around $100 or so. Make sure you feel comfortable with the person and request client references before using the service. They should also suggest a simple accounting package like quicken or quickbooks to track your income and expenses and have a working knowledge of the software. You will be able to use this software to file your own taxes but until you are extremely comfortable with the whole process, you should have your accountant review your filings prior to submiting them. By using software to track this stuff for you, it will minimize his/her time in reviewing and will pay for itself in fees savings. You should budget about $700 or so per year in accounting fees (which are also tax deductible). Make sure you also have a good relationship with your tax guy and make sure he isn't the type that charges for a very rare 5 minute phone question. That should be a value-added service he/she provides to his/her clients.

Good luck!

nanbo · Aug 27, 2005

As a past (and somewhat still) tax accountant, I highly suggest you speak with a local tax professional who specializes in SMALL BUSINESS tax accounting. You ARE a small business as a contractor and need to have an appropriate tax strategy for it. There are a lot of things you can do to save on taxes as well as defer taxes to a later date, but you really need to have a sit down with a professional. Additionally, you may be non-compliant with the IRS if you are earning enough money to require quarterly estimated tax deposits and currently are only paying taxes in April. A 2 hour consultation should cost you around $100 or so. Make sure you feel comfortable with the person and request client references before using the service. They should also suggest a simple accounting package like quicken or quickbooks to track your income and expenses and have a working knowledge of the software. You will be able to use this software to file your own taxes but until you are extremely comfortable with the whole process, you should have your accountant review your filings prior to submiting them. By using software to track this stuff for you, it will minimize his/her time in reviewing and will pay for itself in fees savings. You should budget about $700 or so per year in accounting fees (which are also tax deductible). Make sure you also have a good relationship with your tax guy and make sure he isn't the type that charges for a very rare 5 minute phone question. That should be a value-added service he/she provides to his/her clients.
Good luck!

Eddy, Thanks so much for the info, it was very helpfull! Have a great day!!!

nanbo