Tax Tips for Nurses

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Staff Writer
November 29, 2018
Tax Tips for Nurses

Nursing is an attractive career for those who want to serve others while enjoying challenging work, competitive pay, and the opportunity for professional growth. If you’re a nurse, keep in mind these tax tips to maximize your potential refund.

Nurse-Specific Tax Deductions

Itemizing your tax deductions can potentially reduce your tax burden compared to taking the standard deduction, depending on the total amount of your deductions. Nurses might be unaware of certain professional deductions they can claim on their tax returns, including:

  • Medical supplies and tools beyond what your employer provides. For example, perhaps you purchased your own stethoscope; the cost is tax-deductible. Keep in mind that equipment that will be used for longer than a year must be deducted gradually over its useful life.
  • The cost of buying and cleaning uniforms if these are not provided by your employer. You can also deduct the cost of work shoes, provided that you wear them only while at work.
  • Most states require nurses to take annual continuing medical education credits to maintain licensure. The cost of these courses can be deducted as a business expense, along with the cost of required materials and a portion of your transportation costs.
  • If you travel to patients’ home to provide care, you can deduct transportation expenses that take you from one assignment to the next (but not from your home and back). This includes cab fare and public transportation costs. If you drive your own car, either deduct the actual cost of oil and gas, or use the IRS standard mileage deduction and keep track of your miles.
  • If you belong to a nursing union or professional organization, you can deduct the cost of your dues.
  • Professional license fees are deductible, as well as the cost of the required background check.
  • Professional or malpractice insurance premiums are tax deductible.
  • Subscriptions to professional journals and conference registration fees can also be deducted.
  • If you’re searching for a new nursing job, you can deduct costs associated with the search.
  • If you get a new job more than 50 miles away from your home, you can deduct the cost of moving expenses for you and your family.

Understanding the Impact of the Tax Cuts and Jobs Act

The U.S. recently passed the most comprehensive tax law changes in 30 years. Here’s what nurses need to know about how their taxes will be affected. Per diem rates and stipends are not treated differently under the Act. Travel nurses can still receive stipends for meals and other reimbursements.

However, because the standard deduction has been raised to $24,000 from $12,500 in 2017, many nurses may no longer be able to itemize deductions. For this reason, consider negotiating higher pay rates and higher reimbursements if you take on a new job assignment.

If you are one of the few nurses who works as an independent contractor, you will now receive a 20% deduction on income that is subject to self-employment tax (also called pass-through income). This may include agency income paid with a Form 1099. If you’re not sure how much of your income is taxable or how you are classified as an employee, check with the staffing agency to confirm.

Tax Treatment of Continuing Education Costs

Whether you are an LPN studying to become a registered nurse, a registered nurse pursuing your bachelor’s degree, or on the path to a career as a nurse practitioner by earning a master’s degree, you can deduct all or part of your education expenses, depending on how your employer reimburses these costs.

Coursework is tax deductible as long as it supports your current line of work and does not qualify you for a new line of work. This means that if you are working toward a higher-level nursing position, you can write off tuition, books, fees, and other costs associated with earning your degree.

Special Considerations for Travel Nurses

Travel nurses have a few complexities when it comes to filing annual income taxes. Some considerations to keep in mind include the following:

  • In addition to your federal income tax return, you must file a state tax return for every state in which you earn income. The only exception is when two states where you earn income have a reciprocal agreement with each other.
  • If you do not maintain a permanent residence, the IRS will consider you transient. This means you will not be able to deduct your travel expenses, so avoid transient status by establishing an address in your home state. You can prove your tax home by showing the IRS documents detailing mortgage and rent payments, driver’s license, car registration, and voter registration.
  • A state is considered your home base if you work in that state for at least 12 months, even if you have maintained an address in a different state.
  • Your pay stub includes both your base pay rate, which is taxable, and items such as stipends and travel pay that are not taxed. Check these against your employment contract, which should always be saved for your records.

Tips for Tracking Your Receipts

To maximize your tax deductions, make sure you save every receipt associated with nursing job expenses. This includes everything from a cup of coffee at the airport while traveling to your next assignment to cab fare when traveling from one patient’s house to the next. With smartphone apps, it’s easier than ever to track your work expenses. These allow you to snap a picture of the receipt and tag or label it, so it’s easy to find when tax time rolls around. Some programs even allow you to send the digital files directly to your CPA.

The bottom line? If you’re overwhelmed by tax preparation, consult with a professional about your income, expenses, and deductions.

If you’re a nurse who is struggling with tax debt, credit card bills, or student loan payments, seek assistance from Solvable today. We can match you with debt relief programs with great reviews that will help you get ahead of overwhelming debt payments.

 

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