A Travel PT Series: Navigating the Tax Home Process, Travel Taxes, and Travel Contract Tips

Maintaining a Tax Home

So, now that you know many of the pros, cons, and how-to’s of travel therapy, let’s move on to some of the less fun—but incredibly important—aspects of being a traveler: maintaining a tax home and navigating travel taxes!

One aspect of travel therapy that new travelers are often unaware of is the importance of maintaining a qualifying tax home if they want to receive tax-free stipends. One of the reasons travelers may qualify for tax-free stipends is because they are “duplicating expenses.” In other words, you are maintaining financial responsibilities at your permanent tax home while also incurring expenses for lodging, meals, and other necessities at your temporary contract location.

Because everyone’s financial and tax situation is different, it is important to understand the requirements for establishing and maintaining a legitimate tax home rather than simply assuming that having a permanent address is enough.

Tax returns can also be subject to IRS review or audit, which makes maintaining appropriate documentation incredibly important. If tax-free stipends are later determined to have been received incorrectly, you could potentially be responsible for back taxes, interest, and penalties.

TravelTax.com offers helpful resources and checklists that can help travelers better understand tax-home requirements and determine what documentation they should maintain.

My Biggest Recommendation: Use a Travel Tax Professional

Travel taxes can be challenging to manage, especially if you work in multiple states during a single year. I strongly recommend working with a tax professional who specifically understands travel healthcare professionals.

There are several companies that specialize in working with traveling medical professionals. TravelNurseTax.com has been my tax provider for several years, and they have done an excellent job helping me manage the complexity of my travel contracts, small-business income, and work as a remote professor.

Tax regulations can also change, sometimes affecting what expenses travelers can and cannot deduct. For example, expenses that travelers may have been able to deduct under previous tax rules may no longer qualify under current federal tax law.

Personally, I find it much easier to work with a tax professional who stays current on tax regulations and can help ensure that I am following the applicable rules rather than trying to navigate everything myself each year.

Important: This blog is intended for general educational purposes and should not be considered individualized tax advice. Always consult a qualified tax professional regarding your specific situation.

Smart Budgeting for Time Between Contracts

Another important component of travel therapy is determining how much money you need to save for the time between contracts.

As travelers, many companies pay us weekly. However, depending on the employer and payroll schedule, you may have to wait before receiving your first paycheck at a new contract. This means that if you plan to take two weeks off between assignments, you could potentially go several weeks without receiving a paycheck.

While that may sound stressful, it doesn’t have to be if you plan appropriately during your current contract.

I recommend determining how much money you will need during your planned time off and then dividing that amount by the number of weeks remaining in your current contract.

Here is a real-life example:

• Your net pay on your current contract is $2,500 per week.
• You plan to take two weeks off between contracts.
• Based on your anticipated payroll schedule, you estimate that you will go approximately four weeks without receiving a paycheck.
• You determine that you need $6,000 to comfortably cover those four weeks.
• Your current contract is 13 weeks long.
• $6,000 ÷ 13 weeks = $461.54 per week.

By setting aside approximately $462 from each paycheck during your 13-week contract, you will have the $6,000 you need available before your planned break.

One additional tip is to consider maintaining a separate account for your travel-related expenses. I use this approach for expenses associated with traveling to and from assignments because it makes tracking my spending and organizing my records at tax time much easier.

One Last Tip: Guaranteed Hours

Depending on where you are traveling, you may incur significant expenses before you ever work on your first day. You may have transportation costs, temporary lodging, housing deposits, pet fees, utility costs, and other expenses associated with relocating to a new contract.

The last thing you want is to arrive at your new contract expecting to work 40 hours per week only to discover that the facility’s census is low and you are being scheduled for just 28 hours.

A substantial decrease in paid hours can have a significant impact on your expected income and, depending on how your contract is structured, may also affect other components of your compensation package.

One way to protect yourself is to request guaranteed hours in writing as part of your contract.

If you are expecting 40 hours per week but the facility is only willing to guarantee 36, you can evaluate that information before accepting the position and determine whether the contract still makes financial sense for you.

Also, read the guaranteed-hours language carefully. Look for circumstances that may allow the facility to reduce or cancel guaranteed hours, such as facility closures, low census provisions, missed shifts, requested time off, or other contract-specific exclusions.

The goal isn't simply to find the contract with the highest advertised weekly pay. The goal is to understand exactly what you are agreeing to—and what you can realistically expect to earn—before you pack the car and head to your next assignment.

Hopefully, this blog helped clear up some of the common financial and contract questions you may have as a travel therapist.

Pack light, negotiate hard, and I’ll see you on the road.