will i get audited

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Specializes in LTC, Hospice, Tele, ICU.

I'm very interested in travelling and hope to get an assignment later this year therefore I basically 'attack' any traveller I meet and ask them tons of questions. Recently a nurse I met said that if you take tax free money then you're more likely to get audited by the IRS. She said she doesn't take any tax free money. I'm sort of wondering if she's cutting herself short. Has anyone heard of this? I definately don't want to get audited LOL. Any advice?

Oh and Happy New Year to all. May 09 be full of code free shifts ;-)

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Specializes in NICU, Post-partum.

Technically, according to the IRS, you are supposed to claim every dollar of income earned...but you already knew that.

People generally get paid one of two ways....paycheck or 1099.

Paycheck...the taxes are already taken out for you...this is usually only when you are directly employed and you will also see a W-2 at the end of the year.

If you are on contract, there is nothing wrong with taking money from a company (or anyone), by check or cash, as long as you set it up with a CPA to pay quarterly taxes on your own...if you do not pay taxes quarterly at minimum, you can face penalties for not paying enough in throughout the year (this is lost revenue to the gov't).

If a company is paying you by the later method, they will issue you a 1099 form at the end of the year...this is the amount that they are reporting to the IRS as being paid TO YOU...so THEY as a company, can document it as being paid for labor.

You are not more likely to get audited based on how you get paid. People get audited both randomly, and when their lifestyle does not equate to their income, or when they take too many deductions, based on percentage.

Yeah, your friend is turning down money that is ok for her to accept.

PS: Be sure to set up an appointment with a CPA to see what is and is not income. If you get paid mileage, that isn't considered income, and therefore, you don't pay taxes on that.

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Specializes in Physical Rehabilitation.

If you take the the tax advantage and decide to apply for a loan (car, house) the loan company will use your taxed hourly rate as your salary. Also, if audited by the IRS, you need to be able to account for the "tax free" portion via IRS appropriate deductions.

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You may also owe a 15.3% Self-employment tax on top of everything else

http://www.irs.gov/businesses/small/article/0,,id=98846,00.html

I suggest speaking with a CPA....

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Specializes in LTC, Hospice, Tele, ICU.

Goodness sounds like she may be right. Perhaps its easier to not take the tax free money.....its just my darn luck the IRS would audit me and make my life miserable. Do alot of travellors get audited?

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Specializes in NICU, Post-partum.
Goodness sounds like she may be right. Perhaps its easier to not take the tax free money.....its just my darn luck the IRS would audit me and make my life miserable. Do alot of travellors get audited?

But that is why someone needs to talk to a CPA. They can even manage it for you. It is part of the service that they provide for you.

Seriously, it's really no big deal. All the CPA does is do every three months what a regular employer would do for you every 2 weeks.

I have personally, known only a couple of people that ever got audited, and as long as you keep your tax records each year...that is all, as a taxpayer, you can do.

Hollywood has "hyped up" audits to make them out to be something that they are not. People only need to worry about an audit if they are cheating on their taxes or have a tendency to keep poor records.

Every tax year, when they are paid, I put everything from that year in a manilla envelope, and mark it with the year. Any receipts, etc, goes in that same file.

I use the same file to collect things throughout the year, that way when tax time comes, I don't even have to search for anything. Takes me about 5 minutes to prepare my taxes to take to my CPA.

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Specializes in NICU, Post-partum.
You may also owe a 15.3% Self-employment tax on top of everything else

http://www.irs.gov/businesses/small/article/0,,id=98846,00.html

I suggest speaking with a CPA....

The self-employment tax is not what it sounds like....when you earn a regular W-2 wage, you pay into social security and medicare each month.

The self-employment tax is the SAME thing. It is not a tax, as in, just a tax that is money flushed down the toilet.

Keep in mind folks, they have been saying for over 50 years that social security is going to go broke. The fact is that there are more people paying into social security now than ever before, and not everyone lives to collect on it, that pays into it. The "Baby boomers" that everyone is freaking out about...well, they PAID into the system, and not all of them lived to collect it either...this is simply media hype to get people to abandon the program and to self-invest...and who trusts the stock market right now or investment companies?

Social security income was never designed to live on. It was designed to be supplemental income to your own savings and retirement. So when you hear people say, "But she can't just live on social security!"...that's b/c it was never meant to be someone's sole source of income.

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I worked for H & R Block as a tax professional before I started nursing school to become an RN. I will finish this May. You usually get some sort of form from the company you work for even if its tax free money earned. That is usually put on your 1040. I do not believe you have a higher chance of being audited with getting money tax free ecause you do pay those taxes when it is added to your income. Talk to a tax consultant if you are concerned to ask their opinion. I would talk to a manager, they usually know more than just any employee.

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My company MAKES you participate in the tax advantage program.

Either way, you are entitled to those deductions, so whether you take them up front or while you file, you still don't have to pay taxes on that money.

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Specializes in NICU, Post-partum.
My company MAKES you participate in the tax advantage program.

Either way, you are entitled to those deductions, so whether you take them up front or while you file, you still don't have to pay taxes on that money.

You still have to pay taxes on income.

My employers, when they reimburse you for expenses, such as housing and car mileage, there are limits to these expenses, but records should be kept to prove these expenses. Anything the IRS considers to be "excessive" must be reported as income.

There is no getting "out" of paying taxes on INCOME...that is quite different from company reimbursements.

I think you are getting it confused with paying quarterly taxes...if you are a 1099 employee, you MUST file quarterly at minimum or you risk getting into not only a paperwork nightmare at the end of the year but paying a hefty fine.

Deductions, you have to be careful about how many you take...what is left is your actual income and if you ever need to take out a loan...what you claimed is what you make, MINUS the deductions.

I personally (no offense to the previous poster) would never go to a seasonal or full time tax preparer for 1099 tax filing. They are not educated in all aspects of tax law...the computer will tell you what deductions you can take, but won't tell you the tax ramifications of taking it, that is where your CPA comes in.

You never have to worry about an IRS audit as long as you keep good records. Anyone can get randomly audited.

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You definately have to pay taxes on all income earned. You can't take your pay tax free, even if you wanted. I doubt your employer would let you. But, if you take the housing stipend, you can take it tax free as long as you "qualify."

I agree with hiring a CPA who specialilzes in travel nursing, as there are many things most regular CPAs don't know!!

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