The time that many folks dread is here… it’s tax season! For some this can be a stressful time. For others, it’s nothing to worry about and can even be something to look forward to. The following tips can help make tax season one of your favorite IRS holidays.
1. Fill out your W-4 correctly.
Even though you may be working outside your state of residency, you may still be obligated to pay state tax in your working and primary state. Some states have reciprocal agreements with each other and some do not. The safest approach is to speak with your tax advisor ahead of time. If you find yourself in a state that does not have an agreement with your home state, he or she may advise you to withhold additional monies for each state, so you are covered come April.
2. Track your expenses.
This is an absolute must. Rest assured if the IRS audits your file, they would need documentation of the expenses, when they occurred, and where they occurred. So, keep your receipts as proof of payment. Here are some means to achieve that:
- Keep a folder for each assignment and place ALL your receipts in there. Your tax preparer can go through them and let you know what you can and cannot deduct.
- Use a single credit card dedicated solely for expenses on your assignments. You will then have one place you can access all your expenses. Online statements are a click away and you can go back quickly and view a long amount of time and transactions.
- Keep track using a spreadsheet. This method requires some time for input, but can be an effective way of tracking all your expenses. Again, keep your receipts; a simple spreadsheet is not documentation of expense, just a helpful tool for organization.
3. Enjoy your deductions.
As a travel nurse, there are many. That’s the great news. Cell phones, excess mileage costs that exceed what your company reimburses you, uniforms, license fees, and many more may be deductible.
Although the above are absolutely great strategies to prepare for the tax season, there is one important piecing that ties this altogether, a CPA. Unless you are a traveling CPA (and yes they do exist), have your taxes prepared by a professional. We’re not talking turbo tax or another online service. Although those are great tools for lots of people, your situation is not common. Try to find a CPA that has experience working with traveling contractors. The difference may amaze you.
For a few more helpful tax sites, click here. Good luck and happy tax season!