Travel Nursing Pay – Record Keeping for Tax Purposes: Part 2

In part 1 of this series, we discussed the importance of keeping your travel nursing contracts and pay-stubs as a travel nurse. In this post, we’ll discuss the importance of keeping travel records, keeping receipts, and finding a good tax adviser.

Travel nursing travel/transportation records

The vast majority of contracts are going to include a travel stipend. Different agencies pay these out in different ways. No matter how they are paid, you must justify receiving them with a transportation log and/or receipts.

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This is very different from the lodging and M&IE stipends. Again, lodging and M&IE stipends are typically based off of the GSA guidelines which represent the maximum amount of tax-free money that an employer can provide to an employee without requiring receipts. Travel stipends do require some form of justification. Additionally, the travel stipends provided by agencies often don’t cover the total cost that nurses incur while traveling to and from their travel nursing jobs.

Keeping an accurate record of all travel expenses can help travelers negotiate larger travel stipends with their agencies if the amount the agency provides is less than the actual expense. On the flip side, without a transportation record travelers will have to declare the tax-free stipend as income and pay taxes on it at tax time. Unfortunately, recent changes in the tax code no longer allow travel nurses to deduct these expenses from their income for tax purposes.

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There is no one way to keep a record of your travel expenses. However, there is certain information that must be recorded. For example,the IRS requires that a mileage log includes a date, a starting location, an ending location, an explanation, and the number of miles driven. It also requires that you record your starting and ending odometer reading for the year (1/1-12/31).

There are many tools available on-line to assist you with maintaining their travel and transportation records. Many of them focus on one aspect of traveling or another. For example, many focus only on mileage. I strongly recommend that you keep a comprehensive Travel Expense Record for each assignment. A comprehensive record gives you one location to record all travel associated expenses. And you will undoubtedly need to track more than just mileage.

For example, let’s say you drive from North Carolina to Nevada for an assignment. You will certainly do more than just drive. You may stop at a hotel or two along the way, tip the bellman, and have a few meals. A comprehensive Travel Expense Record allows you to record all of these costs in one location.  IRS Publication 463 provides a detailed sample Traveling Expense and Entertainment Record that is very useful.

Should you keep receipts as a travel nurse?

I have found that there is some confusion as to whether or not travel nurses should keep receipts. I believe the confusion originates with the fact that you are not required by the IRS to keep receipts for the lodging and Meals and Incidental stipends that you receive. Remember, the rates set by the IRS for these stipends are the maximum amounts that can be provided without the agency collecting receipts for justification.

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However, receipts are important for two reasons. First, they provide proof in case of an audit. If the IRS audits you or your travel nursing agency, then having receipts to justify any reimbursements is very beneficial.

Second, if an agency pays a stipend that is lower than the maximum amount allowed, then you may be able to convince your agency to provide more tax-free reimbursements to cover the cost. Having receipts that prove these expenses is helpful.

Keeping receipts seems like a daunting task. However, I personally believe that it’s well worth it for travelers to keep receipts. Remember, receipts are required for travel expenses (except mileage which is covered by the mileage log) and miscellaneous expenses. If you get in the habit of saving all your receipts, it will eventually become an after thought.

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I recommend keeping travel receipts, miscellaneous receipts, lodging and M&IE receipts separate to stay organized so that you can remain quick and efficient when you need to access them. How you do this is up to you. I worked with one travel nurse who kept each classification of receipt in a separate Ziplock bag; the kind that have the film on the outside that you can write on. She kept a set of bags for each  assignment and wrote the dates of the assignment and the classification of receipts on each bag. Come tax time, she was prepared to send everything to her tax adviser with minimal effort.

Finding a good travel nursing tax adviser

Ensuring minimal effort on your part is our goal here. Keeping your records organized in real-time is a huge step toward that goal. You do not want to be scrambling around at tax time trying to compile a year’s worth of tax records. You will inevitably run in to road blocks that you would not have encountered had you kept your records in real-time. This will cost you time and trouble. Another way to cut down on your effort in this area is to get a tax adviser.

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If we’ve learned one thing from this series on taxes, it’s that travel taxes are very complex. In addition to what we’ve discussed, you will most likely have to contend with filing in multiple states. Each state has its own rules and regulations. Making sense of them here would be futile both because they are so extensive and because they are constantly changing. For all of these reasons, using a tax adviser experienced with travel tax issues will definitely be worth the cost.

You should be very selective with your choice. Make sure that the person you select has extensive experience with these issues. Ask them if they have gone through the audit process and what the results were. Ask them if they guarantee their work and find out how many years experience they have with these issues. My personal recommendation is the team at TravelTax. They know travel taxes inside and out and are very good at what they do. They also have a handy Receipt Envelope that will help you stay organized!!