Typically, tax-free funds are included in the packages to take care of incidentals, lodging, and meals. These funds compose a substantial portion of the pay. Fortunately, by avoiding payroll tax, you’re able to pocket a larger amount of your pay.
However, the tax-free stipends are only available to a travel nurse who maintains a tax home. A tax home is a general area or an entire city where your primary place of employment is, separate from your family home.
To claim a tax home, you need to be paying duplicate costs like a mortgage payment or rental fees for a family home. There are factors for consideration to determine if claiming a tax home is worthwhile from an income standpoint to become a traveling nurse.
Travel Nursing: Pros And Cons Of Having A Tax Home
On the surface, travel nursing is an attractive prospect. There are many perks that come with travel nursing.
Some travelers, either blatantly or unknowingly, avoid the requirement to maintain a tax home. In those instances, the travel nurse stands to make better money than someone following the rules.
The problem with disregarding the tax-home policy is that it’s a violation of IRS regulations. If audited, you will owe back-taxes and penalties. You’ll find there are limited pros and many cons to having a tax home and tax-free money for travel nurses, including:
PRO: Tax-Free Money Available
Following protocol, travel nurses have tax-free money at their disposal. These funds help them pay for any incidentals, all lodging, and any meals. There are virtually no expenses while you’re on the road as a traveling nurse, or will there be?
With no payroll taxes, a lot of money can go directly into your pocket. But that is virtually the only pro as far as income and taxes for a traveling nurse.
CON: A Tax-Home Is a Requirement
To take advantage of the tax-free funds, you need to maintain a tax home that you designate from a primary place of employment. You can claim a city or a localized area. While tax-free money is a benefit, it can be expensive and can prove challenging because there is a struggle over maintaining a tax home.
You can’t acquire a tax home unless you already have a mortgage payment on a home or rental fees for a property. You need to be able to show that you incur duplicate expenses.
That creates added expense and deducts from the income capacity of a nurse. In the nursing field, those who want to travel need to determine if it’s worth their while to take a pay cut so that they can explore while they work.
Or do they need to? It’s the same as any other industry. It’s merely a matter of learning how to maneuver the policies and make them work for you.
You might see more cons than pros in this particular comparison based on the tax component. But the profession offers a plethora of positives, on the whole.
Recruiters like those at New Directions Staffing can show you what the advantages are and help you resolve the cons with merely a little planning.
Over time with any job, maneuvering your benefits to where they work for you is all part of the process. That’s true with travel nurses as it is with any industry. These positions just offer a bit more complexities, yet also a great deal more freedom, growth, and enjoyment that no one wants to pass up.