So much false information surrounds travel nursing and the IRS. Some nurses believe they are cheating the IRS by receiving a housing stipend tax-free from their employers and it's only a matter of time before the IRS sends the police to lock them up. Some believe they can only work on an assignment for a year before they must move on. Hogwash! Read on and find the truth.
"IRS Publication 463 Travel, Gift, and Car Expenses" is often quoted by nurses and others as the governing document for travel nurses for what they can deduct and how long they can stay at an assignment. Again, nothing could be further from the truth. IRS publication 463 does not apply to travel nurses that receive a housing stipend from their employers and do not deduct any travel expenses against their W2 income.
If you read the introduction to IRS Publication 463, it states if you are reimbursed by your employer for your travel expenses, IRS Publication 463 does not apply to you. Travel nurses fall into the does-not-apply group.
The IRS is concerned with your W2 income and any deductions you take against your taxable income. If you are not taking deductions against your W2 income for traveling, Publication 463 does not apply. Your travel company is providing you with a housing stipend that is given to you to cover your food and lodging and any travel expense you may incur. If you take the housing stipend AND claim W2 deductions for your travel expenses Publication 463 WILL apply to you. You may also be breaking the law. Seek professional help if this applies to you.
One great myth that comes from IRS Publication 463 is that you can only stay one year at a travel assignment. Now, this may be an edict from your travel company, but the IRS does not care how long you stay at an assignment unless you take W2 deductions involving your travel assignment. If you take W2 deductions related to your travel nurse job, you have now crossed over into the world that is governed by IRS Publication 463. Note that this doesn't apply to deductions for things like your house mortgage. It's just that you can't both deduct travel expenses AND be reimbursed for them at the same time.
What if your travel expenses exceed what your travel company provides for you? You are certainly able to deduct those expenses, but keep in mind you are now governed by Publication 463. If you are in love with the assignment, you are on, you can only stay one year there if you take travel-nursing-related W2 deductions.
Another falsehood that is passed around in nursing circles is that you can go "tax-exempt" for a few paychecks and the IRS does not care. Oh, they do care. Anyone who tells you that you can go "tax-exempt" for a single or several pay periods, and it will not catch up with you has no understanding of the tax code.
At the end of the year, we all receive a W2 from our employers detailing how much money we earned and how much taxes of varying types were taken out. Nowhere on a W2 statement is a "Tax-Exempt for a Few Pay Periods" exemption. Your total income is reported, and your total federal taxes paid are reported. When you or a tax professional calculates your taxes, if you have not paid enough taxes, you get to pay the difference at the end of the year. You get to pay the difference as one lump sum or you can set up an installment plan with the IRS. If you set up an installment plan, they will also charge you interest on the unpaid tax balance. The IRS can also be unforgiving when they look at your records and realize you owe them money because you just decided to crank up the dependents to '999' for a few months. They even have a term for this – tax fraud. Going tax-exempt for a few pay periods is not looking as great as it once did. This absolute lie has caused so many nurses over the years to have to pay substantial taxes at the end of the year. Do not fall for this falsehood.
I am not a tax lawyer, tax accountant, or even a certified tax preparer; but I have worked as a travel nurse for twelve years and I did not want to wind up dealing with the IRS. Therefore, I researched these topics and found out for myself.
I hope this information helps you make better tax decisions.
A CPA would just be speculating what you meant, just as I did. Thank you for clarification on the term you coined, but it is a fuzzy term at best. Deductions are taken on your 1040, not your W-2, and not all taxable income is reported on a W-2. We have been discussing cases where stipends (which are considered reimbursements and are not generally noted on a W-2) must be reported by a traveler not eligible for tax free treatment as income, and of course there are 1099 INT and 1099 DIV income and 1099 MISC that has nothing to do with W-2s. But deductions apply to them just like W-2 income on your personal income taxes.
I am glad you are all knowing about CPAs. That makes me feel better. At the core of your nonsensical argument that talks about things my article does not, are you saying that Pub 463 applies to travel nurses that take the housing stipend? Each rant that you make confuses me more and more.
Each rant that you make confuses me more and more.
I get that. We could call your "article" a rant, but probably intended to help. It is certainly disinformation that I have worked to overcome for 20 years on travel sites, almost of it generated originally by recruiters, but some by local tax preparers unversed in travel nursing. When you can get a national authority on travel nurse taxes and audits to agree with you instead of me, I will retire from social media.
From your own rant:
So much false information surrounds travel nursing and the IRS.
This is perhaps all we agree on, but for different reasons.
Some believe they can only work on an assignment for a year before they must move on. Hogwash!
Partly true I suppose but there are tax consequences to extending your assignments in the same general area over a year: your tax home shifts and no more tax-free stipends. This is my main complaint about your article disinformation and the one that could really hurt travelers and does.
Another falsehood that is passed around in nursing circles is that you can go “tax-exempt” for a few paychecks and the IRS does not care. Oh, they do care.
This isn't what I would call a common traveler myth (all sorts of employees play this game) and it is the first mention of it I can remember seeing on AllNurses. I would agree it is a silly game to play at today's interest rates unless you really need cash right now (a category few travel nurses fall into). I've never bothered because like perhaps most employees, I prefer a refund at the end of the year.
If you don't have enough withheld at the end of the year, then you could indeed get hit with penalties. But for one paycheck? Nope. Completely legal and practiced by many thousands of employees. And no doubt a few travelers.
Damon McGill, BSN, RN
3 Articles; 19 Posts
A CPA understands what a W2 deduction is. It is a deduction against your taxable income.