2019 Tax Time for Allied Travelers: What’s Your Tax Home State and Other Tips
2019 Tax Time for Allied Travelers: Determining Your Tax Home State and Other Tax-Time Tips
By Tiffany Aller
Tax time can be confusing for the average worker and taxpayer, and that goes double for traveling healthcare professionals who may work in multiple states during the course of one tax year. Fortunately, we have a compendium of tax tips for healthcare travelers that you can consult and learn to ensure Uncle Sam gets his due without a single penny more.
Understanding taxes for traveling healthcare professionals
Tax homes and permanent residences and travel reimbursements, oh my. Use these three tips to protect yourself financially while fulfilling your obligations to the IRS.
1. Establish your tax home
The IRS defines a tax home as “the general area where your main place of business or work is located.” This is the base area where you will pay federal, state and local income taxes. Your tax home may or may not be the same as your permanent residence. Traveling workers must not spend more than one year in any place/assignment away from their tax home or they will not be able to accept reimbursements or deduct travel expenses. In general, your tax home is likely the area you return to between travel healthcare assignments.
2. Treat your tax home appropriately
The IRS needs to see that you are still a resident of your declared tax home. To do so, you should not change your driver’s license to any other state where you are assigned. In addition, keep all of your legal and financial interests in the area of your tax home, including bank accounts. To receive your mail while on the road, have it sent to your tax home first and then make arrangements for the post office to temporarily have it sent to your alternate location.
3. Pay taxes in all required jurisdictions
Your primary tax return for both federal and state taxes will be filed from your tax home jurisdiction. You’ll pay taxes from that location on all monies you earned, regardless of having worked in other states. This doesn’t get you off the hook for state taxes in the other areas you worked in, however. You’ll pay taxes to those other states based just on what you earned in that state. To keep track of what you owe and where, consult the apportionment schedule states provide for nonresidents. When you have multiple states in which you earned income, you can itemize your deductions on specific state taxes as a portion of the income you earned there. Meanwhile, back in your tax home state, you can deduct from your overall tax burden the taxes you paid in other states.
Finally, no list of tax tips for healthcare travelers would be complete without advising you to consult tax experts as you complete your 1040 and state forms each year. They can advise you on nontaxable reimbursements you receive through your travel work as well as other deductions you may be eligible for as a traveling provider.