Whether you work full-time in a local hospital or are a traveling nurse visiting new cities every few months, nursing can be an exciting and rewarding career. While you might feel at ease giving someone an IV or taking vitals, filing your taxes probably isn’t top of mind.
Even so, understanding how you can maximize your income and deductions when filing taxes is important, especially if you do travel nursing or work as an independent contractor.
If you’ve ever wondered "Are scrubs a tax write off for nurses?" or "What tax deductions can a nurse take?,” you’ve come to the right place. Read on for a list of the top tax deductions for nurses and healthcare professionals so you can file taxes in a snap—and save some money.
Before you file your taxes and start thinking about deductions, it’s important to consider your employee status. There are two classifications of employees: employees (i.e. W-2 workers) and self-employed (i.e., independent contractors or 1099 employees).
For those that are W-2 employees, unfortunately you can no longer deduct business expenses from your federal returns as of 2018. Some states provide still provide a deduction on your state tax return, but you'll have to check if that includes where you live and if you qualify.
As an employee, if you're looking to deduct anything you should speak with a licensed tax professional. In addition, you can consult this FAQ on miscellaneous deductionsfrom the IRS website.
If you’re not employed full-time or part-time for a specific hospital in a salaried position, you’re likely considered an independent contractor, or self-employed (a 1099-employee). Frequently, travel nurses are hired on as an independent contractor or 1099 employee rather than under a full-time contract.
As such, travel nurses tend to have many more options for tax deductions. Just like any other self-employed individual, you have a host of tax deductions options available to you that ordinary employees do not.
For a more complete guide, check out our full list of self-employed tax deductions.
There’s a number of items nurses can write off on taxes, from your work clothes to your travel expenses if you work in home care or do travel nursing. Here’s the top tax deductions for nurses to consider:
While work clothes are not a common tax deduction, it is a great tax deduction for nurses and healthcare professionals. Why? Well, most employees do not have a required uniform. Nurses and healthcare professionals can write off the costs of their scrubs as a 100% work-related uniform.
One caveat, though: you can only write-off non-reimbursable uniforms. Even if you paid for your scrubs yourself, if your employer reimbursed you for the cost of the scrubs you can't deduct them. Makes sense right? That would be double-dipping and the IRS isn't too fond of that.
In addition, you might be able to deduct some shoe expenses as well. As a nurse, you're on your feet all day. Long shifts that require a lot of back-and-forth also require shoes that can keep up with the demand. Maybe a pair of Nike Air Max, or Adidas Ultraboost or the ever popular Crocs. Those surely have to be deductible, right? They have a work-related function and you only wear them at work.
Sadly, it depends. If there is an instance where a particular shoe, like clogs, are mandated by your place of work, then it could be deductible. However, just any shoe you desire for work is not.
There are a number of resources out there that claim that nurses can write off scrubs, shoes & stethoscopes. Quite frankly, deducting everything you use in the course of a day for work is a slippery slope and it's important to check with a licensed tax specialist before attempting to deduct these or other items as they may not be allowed. Always err on the safe side when it comes to the IRS!
You can deduct continuing education (CE) programs that are required to keep/renew your license or continued employment.
Educational expenses that prepare you for a new occupation are not tax-deductible, which means nursing students are not permitted to deduct the cost of their tuition in a nursing program. If you are training for a new occupation, there are some government programs that provide education credits. Check out the American Opportunity Tax Credit and Lifetime Learning Credit (LLC) to see if you might be eligible.
Pay union dues? Renewing your RN registration? What about background check fees or fingerprinting? If these were out-of-pocket costs for you and were required to be accepted or keep a nursing job, they may be deductible.
Remember, if you got reimbursed for them—by your employer, by the agency that hired you, or from someone else—they’re not deductible.
Do you make house calls? Travel to events? You may be able to deduct mileage in addition to other business expenses incurred during these trips.
The IRS standard deduction for mileage is currently 62.5 cents per mile, which means you could be eligible for $62.50 in tax deductions for every 100 miles you drive for work. As with anything, there are some caveats for this, like:
If you're driving for work and not using an app like Everlance to automatically track your business mileage and expenses (such as all of the expenses listed above!), then you’re probably missing potential deductions and tax savings.
If you’re working as a travel nurse, you probably have two parts to your paycheck: your hourly base pay and a travel stipend that’s intended to cover meals, temporary housing during your contract, and so on. Generally speaking, if you’re given a travel stipend, the entire amount of this stipend is tax-deductible, so you should deduct this from your taxable income when filing taxes as a travel nurse.
If your travel nurse contracts do not provide a stipend, you will want to deduct expenses individually. Make sure to keep receipts for the cost of any work-related travel expenses, such as meals, lodging, rental cars, Ubers and so on to deduct from your taxes.
In both situations, you should keep all of your receipts for tax purposes when it comes to work-related expenses. Travel nursing taxes are more frequently audited than other professions, so it’s necessary to have the receipts to back yourself up. Struggling to keep track of expenses and receipts? Use an app like Everlance to help you automatically record expenses and keep track of all your receipts in one place. You can even download IRS-ready reports for yourself or an accountant come tax season.
Travel nurses may have many different options for housing during a contract placement—hotels, Airbnbs, short-term rentals, extended-stay housing provided by your hiring company or employer, or another option. This is usually determined by the length of your contract, however, shorter-term housing can be very expensive. Thankfully, most travel nurses can write off the costs of housing, utilities, and so on from your taxes, especially if you also pay rent or a mortgage on a primary residence.
When you’re traveling for work and accepting many different contracts over the course of the year, taxes can get confusing fast. As a result, your best bet is to work with a licensed tax professional who knows the ins and outs of tax laws and can advise you on your unique tax situation.
Otherwise, you can read our guides to self-employed taxes, quarterly taxes and 1099 walk-through to get more general tax help.
Figuring out your “tax home” is really important if you’re a travel nurse to make sure you’re taking all the tax deductions you’re eligible for.
First of all, what is a “tax home?” According to the IRS, your tax home is:
“the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home."
In plain language, if you’re working from somewhere where you’d reasonably expect to spend the night due to the distance between your primary residence and your place of work, you’re working outside of your tax home. If you’re working outside of your tax home, then your travel expenses—lodging, meals, transportation, etc.—are all tax-deductible, whether your employer provides you a stipend (in which case, the stipend is tax-deductible) or not (in which case, you can itemize your expenses themselves).
In order for your tax home to be located in the city your primary residence is in, and not in the city where you’re primarily working and earning money, the IRS requires that you meet these three requirements:
Your travel nurse recruiter can answer questions you may have about tax homes for travel RNs, and you can learn more about tax homes for travel nurses here.
If you’re receiving a stipend for living expenses as a travel nurse, this stipend is generally tax deductible. You can deduct the entire amount of the stipend from your taxable income.
For example, if your hourly rate is $70 an hour and your stipend is $1,000 a week, and you work 30 hours per week for 50 weeks, your hourly base pay will total $105,000 annually. In addition, your stipend will be another $50,000. However, because your stipend is tax-deductible, your adjusted gross income would be $105,000, not $155,000.
With Everlance, you can effortlessly and automatically track mileage and expenses, and scan your purchase history to find eligible deductions when tax season comes around. The average Everlance user saves $6,500 each year in tax deductions. How much could you save? Download the Everlance app now and find out.