Each state has different laws about filing taxes. As a travel nurse, we can live in multiple states a year. Some of these states have federal and state income tax. Also, if you are not declaring and paying monthly for a residency (ie rent, mortgage), the stipends you receive may be taxed at the end of the year, which could add up to be a lot of money that you owe back to the IRS.
Also, by declaring a residency it is important to actually spend time there to qualify it as an actual residency. I have been told that the IRS prefers you spend at least thirty days a year in your home residency city. Because I kept my PRN or Per Diem job at the hospital back home, I travel back every seven or eight weeks to work a few shifts and visit. This gives me a safety net job to always return to when I am without or between contracts as well as a place of residency which qualifies per the IRS.
Being a traveler most likely means that you will file a nonresident state tax return and multiple other tax returns. Depending on the number on states that you work in a year, will determine the number of tax returns filed. Don’t forget your home state too! Something to consider though, is preparing your nonresident state return first, so as you are working through the state you live in, you can claim the credit, in the credit section of your return. This is a great article by Turbotax. Also, some states have reciprocity so you do not get taxed twice on your income. Here is another helpful article by Turbotax on reciprocity.
For 2018, you must file a tax return if you made an income greater than $12,000. Even if you made less than $12,000, the IRS still recommends filing a return. In 2017, a major tax reform titled Tax Cuts and Jobs Act was created. The tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. In order to come out ahead this year, you needed to have paid most of your tax throughout the year as it is earned. If you did not, they may penalize you.The IRS has created a helpful “Withholding Calculator” to assist in maximizing your return and identifying your tax withholding. This double checks to be sure that you have the correct amount of tax withheld from your paycheck in order to not get penalized.
If you are one of the estimated 45 million with student debt in America, you may seek to gain a return by reporting the interest you paid on your student loans for 2018. For those of you, like me, with student loans, you can claim a portion of the interest paid over the last year as a deduction still. However the deduction is capped, as it was phased out for those with higher incomes. If you fall into the 22% bracket (which is an annual income between $38,701-$82,500), you can count on a max return of $550 back to you.
Other deductions available include medical and dental expenses, which must exceed 7.5% of your adjusted 2018 gross income. If you donate to charities, the limit was increased to 60% of your adjusted gross income, which means you can deduct more. Some deduction categories have been taken away, such as job related expenses like uniform, meal, and travel costs. If you relocated, you can no longer deduct moving expenses for reimbursement. The government offers another tax break option if you are still in school, titled the American Opportunity Tax Credit. This provides up to $2,500 or the Lifetime Learning Credit of up to $2000.
Also important to note. The IRS will not consider your return unless you report health insurance coverage for all twelve months or claim exemption from coverage. So be prepared for a possible penalty or delay if you cannot provide either.
In preparing to file your return, make sure all of your documents are available. I usually save important tax documents as PDF’s and place them into one folder on my desktop. Create a folder that is easy to locate, such as 2018 Taxes. Make sure to have a W-2 from each place of employment. If you have student loans, you should receive a Form 1098-E or Form 1098-T. For any additional documents look here for information.
Once you get all your documents together, I would suggest filing early. With the government shutdown earlier this year, and a possible second occurrence, there may be some delay in getting your return back. Also, the faster you file, the quicker the money is in your pocket. Here is an additional five useful tips provided by American Traveler here. Also, the IRS has updated tax return information and a Withholding Calculator to help you be prepared. Remember, the deadline to file for your taxes is April 15, 2019. Tax season can be stressful, so don’t wait till the last minute. I hope that this information has provided helpful.
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