4 must know rules to tax-free money for travel therapists

Learn travel healthcare like a from fellow travelers (unbiased and honest)

You are a speech therapist. Or a physical therapist. Or an occupational therapist. Whatever you are, you are amazing. Helping people that aren’t always so eager to be helped. Then one day you start thinking about travel sonography. Or any kind of travel therapy. You’ve heard of it from co-workers, you follow a few travel therapy pages on Facebook, but man it’s a little confusing. You know travel therapists make more money than staff therapists. And you’ve even heard they make money that is not taxed. But why? And how? Is it too good to be true, or is this real life?

You’re about to learn the key to making tax free money as a travel therapist. First things first, you have to know this. You are not entitled to tax-free money just because you are taking a 13-week contract in a new state. There are lots of therapists who travel and have their whole entire paycheck taxed, and it’s also a wonderful way to have freedom (and yes, still make great money.)

Travel therapists who earn tax-free money follow certain rules to be able to receive that benefit. The rules are grey. Not black and white. The rules confuse companies, travel therapists, and other professions that travel too. They are grey because there have not been enough federal court cases to tell us in black and white terms that “this is exactly how you do this”. So we take suggestions. The IRS has some suggestions. And they are worded in such a way that companies and tax experts all might interpret them ever-so-slightly differently. And no one has been proven right or wrong (yet). But there are some pretty standard guidelines out there for travel therapists that we can follow to stay safer in case of an audit.

A travel therapist must have a tax home

This is not always the same as your permanent residence. So as a travel therapist, it can get kind of confusing where yours is, right? A typical tax home for a typical person is easy. It’s where your primary workplace is. Where you make the majority of your income. Most humans in this world live and make their income from one place. But alas, we travelers are not typical. We are changing the game a bit by traveling away from our home and making income in many places throughout a year.

In order to get the full scoop on tax homes, Nomadicare got a real tax expert in the house! Joseph Smith, the founder of Travel Tax, tells us this: “A tax home is necessary for you to receive any of those reimbursements on a tax-free basis. A lot of people confuse a tax home with a permanent residence. Just because I have a driver’s license, car registration, voter registration, and have all my stuff in place does not necessarily mean that I have a tax home.”

“A tax home is a ‘money home’ versus a legal home, and in the Tax Code the tax home is defined as somebody’s regular place of income.”

Stay with me, okay? I know so far it’s still clear as mud. I remember being on the phone with my recruiter, getting ready to begin my first contract years ago. “You’ll need to have a tax home in order to get the housing stipends,” she said. “Okay, great!” I said back, having no clue what a tax home was or why they were so important. Those were all the details she gave me. And I trusted that if I was doing something wrong she would tell me. Turns out, recruiters usually don’t usually understand tax homes either, and it’s really up to us to learn this so we stay safe!

Tax homes are important because…

Okay so we are learning, as travel therapists, we must travel away from home in order to receive that tax-free money. Therefore, we must prove that we have a home to go away from. There are certain rules we have to follow for our ‘home’ to become a tax home and qualify. If you don’t follow the rules, then everything an agency gives you becomes taxable.

So what are the rules? Well, put on your scuba gear, travel therapists! We are going to dive into the world of taxes.

The 4 travel therapy tax rules:

  1. Duplicate expenses at fair market value (and have proof!) It’s not enough to just travel away from your tax home. Travel therapists actually have to prove that they are duplicating expenses. Essentially, they are paying for their tax home and paying for housing at their new temporary residence. The most common circumstance is renting both places or owning a home and renting your second residence. (We’ll go into some of the less common ways later!)
  2. Travel far enough away from your tax home that you actually need a second home (50 miles is a myth). There is no rule on mileage. Go back to why you are getting a housing stipend? You’re getting it because you’re being reimbursed for duplicate expenses that you have on an assignment. The rule is that you have to be far enough away that it requires you to sleep there, and you spend money on lodging. 50 miles? Yes, some facilities or agencies may require you to be a certain distance because they are paying you a traveler rate (aka, the big bucks!), but this has nothing to do with the tax laws. AMN is a good example. In order to get the housing per diems from them, you must be 50 miles away from your tax home. That is their rule as an agency but it is not a rule of the tax laws.
  3. Don’t abandon your tax home. Keep strong ties to where your tax home is! Go home at least 30 days a year. Joseph tells us this: “30 days is, by an extension of all sorts of IRS rulings, looked at as a baseline. You want to be home for about a month every year, and that doesn’t have to be at the same time. You can break it up. It’s actually more convincing to me if somebody comes home in between gigs or during gigs than just for Christmas…” Also, a few ways to prove you haven’t abandoned your home is by keeping your driver’s license, registration, insurance, and voter’s card there. Using your credit card while your home is smart too.
  4. Keep moving, don’t stay in one area for more than a year. Let’s go back to the definition of a tax home. It’s our regular place of income. If we build regular income in a new area, eventually, that new place will become our tax home. (Eventually = at that 12-month mark!) Be a traveler and travel!
    Our tip? Act exactly like you would if you were on a 13-week business trip. If you were just on a business trip, you would not be changing your driver’s license, you would not be moving all your things, and you would go back home when you can.

Pro Tip: Act exactly like you would if you were on a 13-week business trip. If you were just on a business trip, you would not be changing your driver’s license, you would not be moving all your things, and you would go back home when you can.

Follow those 4 rules to keep a tax home. Then, you’re ready to enjoy the amazing adventures of travel therapy life (and some tax-free money too -woot, woot!)

Cheers to knowing your stuff about taxes,

xo Laura

 

Hey friends. This is really important. I am not a tax advisor and the information I provide on this blog about taxes is not legal advice. Please, don’t treat a blog, Facebook, or your recruiter as your tax advisor. But please, learn some theories here and get some great context to go to your tax advisor with questions about your unique situation!

Keep learning, empowered travelers 💪

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Additional Reimbursements

Did your offer come with something extra that would cost the staffing agency money? This may include a CEU class, scrubs, or sign on bonuses. Don’t worry if this section is blank, most offers don’t have extra reimbursements.

Travel Reimbursements

This is tax-free money that is paid to you to help you pay for the expense of traveling to your assignment. Many staffing agencies pay for this per mile up to a certain amount. They will usually pay this on your first paycheck or split between your first paycheck and last. If you are traveling a short distance this could be a very small amount.

Also, it’s becoming more popular for an agency to not offer this at all. It’s really not a big deal though. If you don’t get travel reimbursement money you should make a bit more in your weekly pay so many times it all equals out.

Weekly Housing Stipends

If you have a tax home you can get money in two ways: Your taxable base pay per hour + tax-free stipends that help pay for your housing and meals in your new city. This is usually presented to travelers on a weekly or per shift basis.

The government tells the staffing agency the maximum they are allowed to pay travelers based on the cost of living in each zip code.

The staffing company does not usually get to pay us the full amount since they only have the amount the facility is willing to pay for us. That may end up being less than the government’s max, if so, no worries. This is okay as long as the total package is fair.

Weekly Meal Stipends

If you have a tax home you can get money in two ways: Your taxable base pay per hour + tax-free stipends that help pay for your housing and meals in your new city. This is usually presented to travelers on a weekly or per shift basis.

The government tells the staffing agency the maximum they are allowed to pay travelers based on the cost of living in each zip code. The staffing company does not usually get to pay us the full amount since they only have the amount the facility is willing to pay for us. That may end up being less than the government’s max, if so, no worries. This is okay as long as the total package is fair.

Weekly Insurance Costs

Medical insurance can impact your final paycheck a lot since it will deduct pay from your check each week. If you are taking the company health insurance, you are going to want to know up front about how much this will cost you per week.

The average is around $30 a week but some companies charge as much as $100 a week to their travelers and some offer some health insurance options for free. If you are not taking their insurance just set this to zero.

Hours per week

For this calculation, put the hours per week you are expecting to work. And then feel free to run it again with the hours you are guaranteed. Many times contracts have guaranteed hours that are lower than the expected hours.

Guaranteed hours means if the facility doesn’t need you to come in, you will still get paid as long as it was their choice and not yours to not work.

Also, find out if this contract has any “call off shifts” where the hospital can call you off without pay a certain number of times per contract. This is common and not a deal breaker but just good to know!

Length of assignment

In travel nurses and allied health the most common length of a travel assignment is 13 weeks. If you are looking for a contract shorter or longer just ask! Sometimes facilities or hospitals who hire you will be flexible.

Taxable rate per hour

If you have a tax home you can get money in two ways: Your taxable base pay per hour + tax-free stipends that help pay for your housing and meals in your new city.

If you do not have a tax home all of your pay will be taxed and put in this field.

Good to know: Your taxable base pay is the only part of your paycheck that is legally considered income. The average taxable base pay is $20 but you might get offers higher or lower than this. It’s the only part of your paycheck that is taxed

Nomadicare’s purpose is to empower. It’s the lifeblood that flows through every single thing we create. We are here to make sure every traveler has all the transparent knowledge they need to make empowered decisions. We want you to feel confident so you can live your dream!

Nomadicare is partnered with dozens of companies and each of those companies have access to different settings, locations, and exclusive contracts. We know their benefit options and who have jobs in each location. We will match you to the best recruiters for you and your goals. Every single recruiter has been vetted and comes with the Nomadicare guarantee.
You can browse the open jobs from many of our company partners on the Nomadicare’s anti bait and switch job board. When you see one that catches your eye, the goal is to apply asap. Jobs are closing faster than ever with all the craziness this year so speed is our best friend. When you request an interview, we’ll instantly match you with the vetted recruiter who posted that job.
Typically 0-3 months before you are ready to start your next assignment is best. A short quiz will give us a picture of who you are, and what you are looking for. After the quiz we’ll have everything we need to match you with the perfect recruirer for your travel goals
If you know where you want to go and you’re ready to travel, Instant Matching is perfect for you. You can browse the open jobs from many of our company partners on the Nomadicare’s anti bait-and-switch job board. When you see one that catches your eye, the goal is to apply asap. Jobs are closing faster than ever with all the craziness this year so speed is our best friend.
We highly recommended being ready! Having all of your documents and being super responsive are key. Speed is the biggest factor in getting the job you want. We recommend using a free service like Kamana, which you can share your online resume, credentials, and licenses with a single link to any of our vetted recruiters when requesting an interview.
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