Every Monday at 2pm e.s.t. in November you will be able to catch The Gypsy Nurse live on our Facebook Travel Nurse Network group discussing popular travel nurse questions. We will be using Facebook Live, which is a live-stream video where people can comment while the live stream is recording. This gives you an opportunity to connect with the person recording and post any comments or questions about the topic they are speaking of.
This week’s topic was “The Truth about Claiming a Tax Home and Free Monies “. The Gypsy Nurse Founder Candy Treft gives you seven tips on claiming a tax home. Below are her seven tips and the original video where Gypsy explains these tips in more detail. Please note, she is not a Tax-Professional, please seek expert advice.
1.) How do I qualify for Tax-Free Monies?
– Also know as “stipends”, “allowances”, “subsidies” or any other word that identifies tax free reimbursement payments
– You MUST be traveling away from your tax-home in order to legally be able to claim any tax-free money.
2.) What is Per-Diem or Tax-Free?
A Fixed daily amount of reimbursement paid for lodging, meals, expenses incurred during Business Related Travel set by the GSA
– M/I = Meals & Incidentals
3.) What IS a Tax-Home?
– Permanent Residence vs Tax Residence
– A tax residence is defined by the IRS as ones principal place of business aka Where do you make most of your money?
– When one does not have a primary area where they earn their income, the tax home can default to the permanent residence of the traveler provided two of three following are satisfied:
1.) Has significant income at home
2.) Has substantial expenses maintaining a residence which are duplicated while on assignment
3.) Has not abandoned their historical area of work and residence
4.) The Abandonment Issue
A substantial visit to home is required after two years of service. i.e 45 days – seek expert consultation!
5.) Popular Questions:
– Can I rent out my home?
– Can I rent from a Parent / Friend?
6.) The downside effects of claiming Tax-Free Monies
– Lower wages = lower Disability/Unemployment/etc.
– If you claim tax-free monies and don’t qualify
1.) You could be audited
2.) You could be responsible for back taxes, fees and penalties which could add up to Thousands of dollars.
7.) Why does the Agency want to pay me tax-free?
– Agency Benefits
1.) Lower Workers comp, Disability and Unemployment taxes – vary by state.
2.) Lower payroll taxes ie FICA=Medicare 1.45% and Social Security 6.2% TOTAL: 7.65% (Agency and employee both pay this amount)
Always remember: “Tax-Free isn’t for everyone. Know the rules and make sure you legally qualify.”
(DISCLAIMER: I am NOT a Tax-Professional, please seek expert advice)
To see the original video with comments from members of The Travel Nurse Network group, click here.