2021 Travel Nursing Tax Strategy — What You Need To Know

Filing Exempt vs Filing Another Number

One of the most common questions we get and one of the most misunderstood is around filing out your w4 and filing exempt vs filing with another number.

Maintaining Your Tax Home

One of the most important things you can do as a travel nurse is to maintain your tax home. This will enable you when you are traveling on assignment to be able to keep your tax free stipend. If you do not maintain your tax home, you could be asked to pay taxes on your stipend or not be eligible to receive one at all.

  1. Maintain living expenses at your place of permanent residence. Most importantly, pay the mortgage if you own and pay rent if you are renting a home, apartment or room. If you do not want to maintain a full home or apartment as your tax home, you can rent a room from a friend for example, but be sure it is in line with the current rental market rates in the area.
  2. Stay registered to vote in your home state. Keep your driver’s license in your home state. Keep your car registered in your home state.
  3. Be sure to return to your tax home (home/apt/room) at least once a year. It is good to return there between jobs if possible for you.
  4. File a Residence Tax Return with your home state.

Not all Tax Homes States Are Created Equal

Not all tax home states are created equal. For example, California will charge you state taxes even on money made in another state. Even if that income was already taxed by the other state. For example, say California is your home state and you do work in Massachusetts. Because the Massachusetts tax rate is 5% and California’s tax rate is 7.25%, California will actually charge you an extra 2.25% on your taxes for money made in Massachusetts.

How You Will Be Taxed By Each State

So, how will you be taxed by each state? This is a little more straight forward. For each state you will pay the state taxes for that state on as much money you made in that state. So for example, if you make $50,000 in Massachusetts, you will be charged the 5% state tax on that amount of money, so $2,500. If you make $50,000 in Florida you will not be charged any state tax because Florida has zero state tax. However, as we mentioned above your tax home state can charge you additional tax on money made in any other state if they choose.

How to Save Big On Your Taxes As a Travel Nurse

The best and really only significant way to save big on your taxes as a travel nurse is with a home based business. At HBB accounting, this is what we specialize in. In fact in our name HBB stands for Home Based Business.

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HBB Accounting

HBB Accounting

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We are an accounting firm that specializes in people with part time and small businesses. We make sure our clients save the maximum amount they can.