Taxes For Nurses? Pay or Get Paid?

Oldmahubbard · Jan 15, 2018

This is one of my major pet peeves. People having no grasp whatsoever of taxes. They think is it too complicated to handle themselves, so they save their receipts in a box and bring them to someone every year.

Fine, if you are the type that doesn't mind paying someone else to do what you can easily do yourself.

Unfortunately, if you do this, you will never develop any real understanding of taxes.

Their are several common misconceptions. One of the big ones is that belief that being able to deduct an employment related expanse essentially makes it "free".

No. You can only deduct employment related expenses if you itemize, and even then they are subject to a 2% income threshold. If you are a nurse making 80k, that means that the first 1600 dollars of employment expenses is on you.

After that, the expense is potentially deductible, meaning you don't pay tax on that portion of your income. For an approximate figure, about 30%.

Not free.

A friend is an NP who occasionally works in a different part of the state and spends the night at a hotel. She has repeatedly told me this "comes off her taxes".

That is incorrect.

95% of the people on this forum have a simple enough tax situation that a 50 dollar software program should be sufficient. It should not be necessary to consult an accountant. My opinion only.

In broad terms, about a third of my check has gone for taxes over the years. This was true back in the 80's when I made 14k on my first job, and it is true now that I make more than 10 x that much.

Taxes, not health insurance. I know many people are paying a small fortune for insurance, but this is only taxes.

Another common misconception is that when you cross an income threshold, now all of your income is now taxed at a higher rate. No.

The last misconception is the belief that it is a good thing, a bonus of some kind, if you get a large refund. No.

The new tax laws will make filing quite a bit easier, mainly because they discourage itemization, which was a lot of the work.

candacern59217 · Jan 15, 2018

It's correct that none of us can answer this for you. I know plenty of people who all do their taxes differently.

Some people want all their money to begin with and choose to put a portion in an account and use it to pay taxes each year when they file.

I choose not to do that. I like getting a refund check.

I try to accurately choose my deductions so I can still maximize my paycheck. I have children, I don't know if you do or not, but that makes a difference.

Whenever you retire, or if you get disabled, what you pay into the system makes a difference cause they calculate what you get out of the system based on what you've paid in. (Social Security)

That's all I've got. See a tax professional. Not a service like H&R block, in my opinion, but like a CPA and someone who will know all the state and local tax laws.

candacern59217 · Jan 15, 2018

Oldmahubbard said:
This is one of my major pet peeves. People having no grasp whatsoever of taxes. They think is it too complicated to handle themselves, so they save their receipts in a box and bring them to someone every year.
Fine, if you are the type that doesn't mind paying someone else to do what you can easily do yourself.
Unfortunately, if you do this, you will never develop any real understanding of taxes.
Their are several common misconceptions. One of the big ones is that belief that being able to deduct an employment related expanse essentially makes it "free".
No. You can only deduct employment related expenses if you itemize, and even then they are subject to a 2% income threshold. If you are a nurse making 80k, that means that the first 1600 dollars of employment expenses is on you.
After that, the expense is potentially deductible, meaning you don't pay tax on that portion of your income. For an approximate figure, about 30%.
Not free.
A friend is an NP who occasionally works in a different part of the state and spends the night at a hotel. She has repeatedly told me this "comes off her taxes".
That is incorrect.
95% of the people on this forum have a simple enough tax situation that a 50 dollar software program should be sufficient. It should not be necessary to consult an accountant. My opinion only.
In broad terms, about a third of my check has gone for taxes over the years. This was true back in the 80's when I made 14k on my first job, and it is true now that I make more than 10 x that much.
Taxes, not health insurance. I know many people are paying a small fortune for insurance, but this is only taxes.
Another common misconception is that when you cross an income threshold, now all of your income is now taxed at a higher rate. No.
The last misconception is the belief that it is a good thing, a bonus of some kind, if you get a large refund. No.
The new tax laws will make filing quite a bit easier, mainly because they discourage itemization, which was a lot of the work.

I agree with this. I've itemized, but I've never had enough to itemize that it made it better than the standard deduction. So I've always thought, is it worth the effort??

I still claim my itemizations, especially as I get older and have more medical bills. Maybe one day the items will be better than the standard deduction. But for now, I just enter them in to TurboTax and it calculates which one is better for me.

I grew up in the generation where we had to get the tax book from the post office and literally calculate our taxes and mail in the return to the IRS. I was young but still in the workforce at that time. So not old enough to be doing things like buying a house and claiming it on my taxes, but old enough to mail in W2's and have to look things up in the tax book. I gained a basic understanding of how taxes work, and I continue to read about different deductions and rules. It's helpful.

**NICU Guy, BSN, RN** · Jan 15, 2018

I have coworkers that change their deductions on their W2 for pay periods that they have overtime. They claim that "they" will take out most of the overtime in taxes. So, by claiming more deductions on that paycheck, they think that the overtime won't be taxed as much. They don't realize that at the end of the year, you pay the exact same taxes whether you have it taken out each paycheck or pay it in April.

Oldmahubbard · Jan 15, 2018

Not that long ago, I was still doing taxes with a pencil, a calculator, and handbook that was published every year.

It was an enormous handbook, but 95% of it was covering situations like having a seeing eye dog while living part-time in NYC. ( I didn't make this up) How to deduct your donations of fine art to museums. What to do about bank accounts in foreign countries.

In doing this, over the years I realized how simple the average persons taxes actually are. And many things that people think are tax deductible, actually are not. Or the deduction is so tiny that the effort to claim it is questionable.

So there are a lot of myths or urban legends out there about taxes.

If you have a job as your only source of income, and you fill out your W2 accurately, you should be ok. Filling out a different W2 for overtime is a waste of time and energy.

Now, what should happen if you have miscalculated, had a financial setback, or other major life problem, and you find on April 15 that you owe and can't pay?

Aside from doing a bit of soul searching about the root cause, you should pay what you can. Then write a letter stating you will make payments, usually over 6 months. Sooner if possible.

You will get a letter back with the exact payment amount and due dates. Stick to it like a religion, and there will be no trouble.

At least this is what I experienced many years ago.

More recently, an acquaintance came in to a church meeting, obviously very upset. He had been to an accountant and he owed taxes.

"Don't worry about it " I said. "They let you make payments"

He said "You don't understand! I'm not done paying last year's!"

The moral of that story is that he was living wrong, obviously beyond his means.

Live within your means and you will be fine.

elkpark · Jan 15, 2018

Oldmahubbard said:
Not that long ago, I was still doing taxes with a pencil, a calculator, and handbook that was published every year.
It was an enormous handbook, but 95% of it was covering situations like having a seeing eye dog while living part-time in NYC. ( I didn't make this up) How to deduct your donations of fine art to museums. What to do about bank accounts in foreign countries.
In doing this, over the years I realized how simple the average persons taxes actually are. And many things that people think are tax deductible, actually are not. Or the deduction is so tiny that the effort to claim it is questionable.
So there are a lot of myths or urban legends out there about taxes.
If you have a job as your only source of income, and you fill out your W2 accurately, you should be ok. Filling out a different W2 for overtime is a waste of time and energy.
Now, what should happen if you have miscalculated, had a financial setback, or other major life problem, and you find on April 15 that you owe and can't pay?
Aside from doing a bit of soul searching about the root cause, you should pay what you can. Then write a letter stating you will make payments, usually over 6 months. Sooner if possible.
You will get a letter back with the exact payment amount and due dates. Stick to it like a religion, and there will be no trouble.
At least this is what I experienced many years ago.
More recently, an acquaintance came in to a church meeting, obviously very upset. He had been to an accountant and he owed taxes.
"Don't worry about it " I said. "They let you make payments"
He said "You don't understand! I'm not done paying last year's!"
The moral of that story is that he was living wrong, obviously beyond his means.
Live within your means and you will be fine.

ITA. I've been itemizing on my returns (because that benefited me financially -- I give a lot to church and charitable organizations) for over 30 years, and I did my own taxes, with a legal pad, pencil, and pocket calculator, until just the last few years, when I've started using an online system to file electronically. Taxes just aren't that complicated or mysterious for the vast majority of people. It's amazing what you can figure out on your own if you're just willing to sit down and read the instructions (and info the IRS provides).

RainMom · Jan 16, 2018

I started out learning how to do taxes in my high school accounting class by doing my boyfriend's (now husband) 1040 EZ form. Super simple. As our taxes became more complex, I picked up more & more, usually just little changes every few yrs. The instructions in the books mentioned above & now website are pretty straightforward.

I strongly believe high schools should have some kind of required basic finance class "How to Adult Without Going Broke" to teach kids how to manage their money, balance a checkbook, file their own taxes, & understand how their credit history impacts everything.

klone, MSN, RN · Jan 16, 2018

My mother made me do my own taxes ever since my first job at age 14. I've done my own taxes ever since (TurboTax, yo). It's not hard. Even when I had a sole proprietorship home business, I did my own taxes.