Tax Reform Updates for Travel Nurses

Posted: & Filed Under: News

Curious how the new tax reforms affect you as a travel RN? Check out some more information below.

No need to fear. For most travelers, the news is OK. It doesn’t impact a decision to be a traveler versus staff. Current compensation schemes by CMS (and most likely other agencies) have not changed. So no one’s take-home pay will drop.

Single travelers who don’t itemize will see a net gain of $1,650 not subject to federal income tax because of the net changes to the standard deduction and personal exemption total. That is around a $400 annual increase in take-home pay. That might be a bit of shrug for most as it will be all but unnoticeable on a weekly basis (about $8/week).

Some travelers who itemize will lose out, especially if they were accustomed to claiming certain deductions usually only familiar to a tax professional who specializes in healthcare travelers. The rules have changed for a couple of items. One is the ability to deduct mileage costs based on IRS allowable amounts (53.5 cents in 2017) if it exceeds the travel allowance from your agency – as it usually does. Some travelers also deduct the commute mileage from the remote housing to the remote workplace. That is also gone.

The other important item for travelers who itemize are M&IE, or meals and incidentals, sometimes called per diems. If an agency does not pay the maximum allowable amounts (per the .gov site), previously you could deduct the difference. That is gone. No worries – CMS will always provide the maximum to increase your take home pay!

There are a number of other federal return deduction reductions that have made news including limits on mortgage interest deductions, contributions to charities, and local and state taxes. Also unreimbursed miscellaneous business deductions such as scrubs, professional associations, and licenses/certifications. However tax-free reimbursements (technically what tax free stipends such as housing and per diems are called by the IRS) from CMS can continue.

These itemized reductions affect travelers and staff equally, so they should not change the financial calculus to be a traveler versus staff.

One item that has met with much news coverage is how changing your tax status from an employee to an independent contractor can provide a new reduction in taxes. However, independent contractors are not permitted to work through a JCAHO accredited agency such as CMS. And note – we are not the only agency. There are other practical impediments for independent contractors. Few agencies allow reporting on an IRS 1099 form (revenue) for an independent contractor (a “pass-through” tax structure) versus a regular employee W-2 (income). Many facility or vendor manager contracts specifically disallow the use of independent contractors, and that would decrease your options.. There are a number of legal issues related to agencies and hospitals that discourage the use of independent contractors, from workers compensation, to unemployment, to IRS audits of agencies that use independent contractors. Overall, taking an independent contractor path is difficult and most travelers will find it impractical.

For any other questions or to get started on your next travel nurse positions with CMS – contact us below!

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