In a previous blog post, we discussed tax tips that travel nurses need when filing their taxes for 2017. Don’t forget – today, Tuesday, April 17, 2018 is tax day! Make sure you’ve taken the time to file your income tax details.
In this article, we want to answer some commonly asked questions about something we alluded to in the last piece – the changes coming with the new tax plan enacted by the Trump Administration on December 22, 2017.
The plan was created by the “Tax Cuts and Jobs Act”, which was signed into law with a final tally of 224-201. These changes went into effect January 2018 and are applied to the 2018 tax year.
Changes to Federal Income Tax Brackets
The main change that everyone is talking about is the update to federal income tax brackets. The updated brackets look like this:
- If your taxable income as an individual is between $0 to $9,525: Your tax rate is 10%
- Between $9,526 to $38,700: 12%
- Between $38,701 to $82,500: 22%
- Between $82,501 to $157,500: 24%
- Between $157,501 to $200,000: 32%
- Between $200,001 to $500,000: 35%
- Over $500,001: 37%
Married Joint Filers:
- If your taxable income as married joint filers is between $0 to $19,050: Your tax rate is 10%
- Between $19,051 to $77,400: 12%
- Between $77,401 to $165,000: 22%
- Between $165,001 to $315,000: 24%
- Between $315,001 to $400,000: 32%
- Between $400,001 to $600,000: 35%
- Over $600,000: 37%
What Are The Effects for Travel Nurses?
Travel nursing often comes with a number of benefits that may be affected by this new tax law. Let’s answer some of the questions you might have about them.
How will the new tax law affect travel nurse deductions?
As we mentioned before, the biggest change is that many of the deductibles you could once declare are no longer deductible. This means things like travel-related expenses, licensing costs, or continued education costs cannot be considered a deductible on your tax return. We recommend reading this in-depth article looking at the major changes introduced if you want to learn more.
Does this also mean travel nurse per diems and stipends are no longer allowed?
No – the new law doesn’t affect per diems and stipends. Your employer can still give you allotted stipends for housing, meals, travel pay, incidentals, and other reimbursements you would normally receive from the employer.
The main change is you will no longer be able to deduct expenses for extra miles traveled beyond your stipend or expenses for meals or housing that exceed your per diem.
Does this mean I no longer need to keep detailed records of travel nursing expenses?
These changes do not mean you no longer need to keep detailed records going forward. Because employers can still give you housing stipends, meal allowances, travel pay and other reimbursements it’s important to keep all records related to these allowances to cover all your bases.
Will travel nurse pay packages change to accommodate these changes?
That’s up to your employer to decide. Your employer may decide to adjust the structure of your pay package to help accommodate for travel, licensing or CEU costs. Since these are no longer covered by deductibles, your employer may reduce the amount given for housing or meal allowance to help pay for other areas.
What actions should travel nurses take in response to this new tax law?
There are a few things you can do depending on where you find you’re spending more than you can afford for your travel assignments.
- Ask for higher reimbursements from your employer. Whether it’s for travel needs or licensing fees, your employer may be willing to give you higher reimbursements to help pay for them.
- If your tax rate is lower, consider a ROTH IRA retirement plan that deducts tax now instead of a tax-deferred traditional 401k or IRS plan so that you don’t need to pay tax on that money in the future.
- Keep an eye on what your state and local representatives have to say about the change. This tax law is still fairly new, so your state or local government may modify their tax codes in response to these federal changes.
Here are a few helpful resources to reference to learn more about how to do your taxes as a travel nurse:
- Official IRS Website: The official website of the IRS is probably the best place to get the most accurate and up-to-date information. They have articles with helpful information as well as calculators to help you figure out your withholdings.
- TravelTax: Specializing in traveling professionals, this site has a number of resources you may find useful and also help you to file your tax return by appointment.
- Travel Nursing Central: They have a number of resources not just related to taxes, but also other questions you may have about travel nursing.
There you have it! The new tax law is complex and there are many changes that were made, but hopefully you feel a little more informed going into the new tax year.
Important Disclaimer: We aren’t CPAs or by any means experts on this subject. We strongly suggest talking with a CPA who has experience working with travel nurses to help you find the best rates for your specific situation. This article is intended to give you a place to start thinking about this very important part of your career.
Best of luck!
The Nomad Team
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