Nurses have gotten a lot of press lately with labor shortages and wage concerns. If you are a full-time employee in a hospital, you may be questioning whether now is the time to make the leap into travel nursing or other contract work.
One of the considerations for employees vs. self-employed nurses (also called contract employees) is the difference in how income tax is treated. There’s also a whole list of tax breaks that are available when you are a contract worker.
If you have any questions about what expenses can be deducted when you are a nurse, it’s always a good idea to talk to a tax professional. S.H. Block Tax Services can help you navigate the specifics of tax law to make sure you are taking the right deductions available to you.
The tax code treats employees differently than self-employed workers. If you’re not sure which one you are, a good indicator is what tax form you receive. Employees receive a W-2 form, while contract employees receive a 1099 form. Not all travel nurses are considered independent contractors, so it’s important to understand how you are employed.
Nurses who receive a W-2 form cannot take advantage of the federal tax deductions listed below. The tax deductions available to nurses are for those who are considered self-employed, and therefore have business expenses related to their profession. For regular employees, there might be an advantage to itemized deductions, or other tax credits like the lifetime learning credit or other education credits to help offset your taxes.
RELATED: Simple Tax Deductions for Small Businesses and the Self-Employed
Nurses have many expenses related to their profession, and if you are paying for things required by your job, then you can probably deduct those costs. Anything that reduces your federal taxable income means more money in your pocket!
Specific examples of tax deductions and benefits you may be eligible for include:
Remember: If you receive reimbursement for any deductible expenses from your employer (including stipends), then they are not eligible for tax write offs. You can’t get a tax break for an expense that you didn’t pay out-of-pocket. Travel nurses can be at higher risk for IRS audits, especially if it looks like you are taking too many deductions on your Schedule C.
RELATED: What Triggers an IRS Audit? And Am I (or My Business) at Risk?
In order to make the most of your deductions, here are a few tips that will help you reduce your adjusted gross income and make the most of your tax refund.
It’s easy to lose receipts, even if they are digital copies. However, by making sure you stay organized throughout the year, you will have the proof you need to show the expenses that you want to deduct. Use an app, or have a specific folder for all your receipts, business mileage, and stipend information. Documentation is key to getting the biggest deduction you are eligible for, and if you are diligent throughout the year, it will make your life easier during tax season.
There are some expenses that qualify for special tax treatment for both W-2 and contract employees. For instance, education and training may qualify for the American Opportunity Tax Credit or the Lifetime Learning Credit. Student loan interest is also deductible.
RELATED: Are Student Loans Tax Deductible?
While most of your nursing expenses are likely to be tax deductible, if you deduct expenses that aren’t eligible you could be in hot water during an audit. You should consider talking to a professional tax preparer to understand how to apply business expense tax deductions to your specific situation. S.H. Block Tax Services has helped many nurses make sure their deductions are eligible for reducing their income taxes.
As a nurse, we know you work hard and need a break. Instead of spending your free time searching for tax benefits for nurses, let our experienced team talk to you about your expenses and see if we can find more tax deductions for you.
Our staff is knowledgeable about work related expenses for nurses and nursing students, and our tax advice has helped many nurses reduce their tax bill. If you want to see what we can do for you, just contact our office by calling (410) 872-8376 or filling out this form. While you take care of your patients’ health, we’ll take care of your financial health.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.
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