For travel nurses working in multiple states, tax time can be a challenging and confusing process. It’s advisable to consider hiring a tax professional who can help you navigate the process since they are familiar with the tax laws of various states and can help you file your taxes accurately. However, with a little preparation and organization, you can make this tax season go much smoother with fewer headaches.
For starters, it’s important to keep track of the dates you spend working at each assignment location. This information will help you determine the amount of taxes you need to pay in each state. Familiarizing yourself even a little with the state’s payroll and tax laws can make a big impact ensuring you report your income correctly and pay the correct amount of tax. For example, Overtime in California is not determined the same as it is in the state of Ohio. Also, those per diem payments are not taxable income and will vary from state to state.
You can take advantage of tax reciprocity agreements between some states – think of this as the compact licenses of taxes. These agreements enable residents of one state to work in another state without having to pay taxes in both states. You should research and understand which states have such agreements.
While roaming the country make sure you have an understanding of your tax home state. You probably hear a lot about this as a travel nurse and it can get confusing quickly. Your tax home may be different than your permanent home, which is used to determine your per diem eligibility. The most basic definition of a tax home is the location where the majority of your income is earned. This is why your recruiter may suggest that you spend some time at home in Vermont before taking that next assignment in West Virginia after you wrapped up in Arizona.
Remember it’s crucial to file your taxes in a timely manner to avoid any penalties or interest charges. By keeping yourself informed, you can make sure you are paying the correct amount of taxes while avoiding any tax-related pains. You got this!
Click below for a few helpful resources
GSA Per-Diem Rates https://www.gsa.gov/travel/plan-book/per-diem-rates
IRS Tax Home Defined https://www.irs.gov/publications/p463
State Reciprocity Agreements as of January 2023