Tax Tips for Therapy Professionals - Traveling and Non-Traveling

Some therapists may think that only travelers are eligible for tax deductions. However there are certain tax deductions all therapists are eligible for provided these expenses are not reimbursed to you by your employer. Information for travelers begins in the next section and addition tax information for all therapists follows.

Are You Traveling from Home?

One thing that all travelers have in common is that they’re traveling from a permanent home when they take a travel assignment.  That permanent home is your tax home; a residence you return to on a regular basis to live and work and the place where you incur substantial and recurring expenses, such as a mortgage or rent.  You may be required to show proof of that residence to establish your traveling assignments as temporary leaves from your permanent home. This in turn establishes your tax status.  Typically, you’re recommended to do the following:

-Retain proof of payment you make to someone back home to show that you’re maintaining a residence, such as a mortgage or rent.

-Stay registered to vote in your home state.

-Keep your driver’s license active in your home state.

-Keep your car registered in your home state, if possible.

-Make sure you return to your permanent home at least once a year.  Working at least a few shifts in a facility while you’re there reinforces your status.

-File a Residence Tax Return with your home state.

Here are the tax benefits of traveling…

Establishing that you’re traveling from your permanent home provides some great tax breaks.  Your travel assignments become temporary leaves from home, defined by the IRS as less than 12 months’ duration.  While on a temporary leave from home, you’re eligible to deduct temporary living expenses that are not reimbursed to you by your employer.  Housing becomes a write-off as do your meals.  You can deduct a daily meal allowance as an expense.  Amazingly, you can actually deduct a certain amount for meals each day and not even worry about keeping receipts if you use per diem tables.

Other deductions can include:

·       Subscription to AAA or other roadside assistance,

·       Long distance calls,

·       Hotel expenses while driving to and from home to different assignments,

·       Travel mileage from home to an assignment and other assignments during the year. (Mileage to and from work while on assignment is considered commuter mileage, so it’s not deductible.)

Clearly, this is a very good tax deal, but there are some pitfalls. State taxes are one example. Every state has different laws, and you must file a return as a nonresident in every state that you work in as well as the state that is your permanent tax home. For many travelers, that means filing in at least two states, which may or may not have reciprocal agreements with each other. If they do, you get credit in one state (typically your tax home) for taxes you pay in other states you worked in, the idea being that you don’t have to pay taxes on the same wages twice. Many therapists end up owing taxes to their home state, even if they didn’t work there.

A common misunderstanding travelers have is that they can deduct moving expenses. (You haven’t really moved if you’re only on a temporary leave from your permanent home.) You cannot continue to take advantage of traveling tax benefits when you have been working on the same assignment for more than the 12 months.

Some companies will offer their travel employees “tax advantage programs.” There are pros and cons to these programs. It is recommended that you avoid contracts where the company pays an extremely low pay rate which is below the norm for your profession for that location (for example $9.00 per hour) with the tax free reimbursements. You don’t want to get mixed up with the companies that may get you in trouble with the IRS.

Obviously, there are some tremendous financial advantages available for traveling therapists. The more you know about your tax situation and how to comply, the better you’ll be able to maximize your travel experience.

Here are tax benefits for all therapists!

Travelers and non-travelers are able to deduct certain expenses that are related to work and your profession, provided these expenses are not reimbursed to you by your employer. Some examples can include:

·       Licensure fees for all states,

·       Association dues for national and state associations,

·       Continuing education costs to maintain your license or better yourself in your profession,

·       Subscriptions for industry trade publications, journals, magazines, and books,

·       Dues for other organizations that are industry related,

·       Parking fees, tolls, mileage and meals, for certain assignments or for attending courses, conferences, meetings, or seminars for your profession,

·       Course materials,

·       Costs to maintain certain credentials such as CPR,

·       Job related computer, internet, and telephone expenses,

·       Equipment and supplies needed for your job,

·       Job search costs,

·       Expenses for stationary, supplies, journals, logs books, and day-timers used for job organization.

Organization is an essential tool for therapists. Keeping track of business expenses is just another aspect which needs your attention. There are a number of software programs available to help keep track of expenses, mileage, and daily use of items such as cell phones for business purposes.

This is only a general article provided to you and Rehab License Network recommends that you seek the advice and guidance of a Tax Professional. The IRS has an Individual Help Line, (800) 829-1040.

IRS Publications to consider:

Publication 463, Travel, Entertainment, Gift and Car Expense
Publication 529, Miscellaneous Deductions
Publication 1542, Per Diem Rates

Download RLN’s Mileage Log to help organize and keep track of your mileage.
Download RLN’s Miscellaneous Expense Log to help organize and keep track of your miscellaneous expenses.

Therapists – Learn more about Rehab License Network “Inner Circle.”

Recruiters – Working from home? Read Tax Tips for Your Home Office.