Tax Changes for 2018: What You Need to Know as a Traveling Nurse
Tax Changes for 2018: What You Need to Know as a Traveling Nurse
While taxes are a lot like fingerprints–no two peoples’ are identical–there are two big pieces of news out of the new tax bill that applies to all travelers. Here are the Tax Changes for 2018: What You Need to Know as a Traveling Nurse.
The good news is that your per diems and stipends are safe. While the IRS will likely change how they are reported in the future, they still won’t be taxed as long as you are playing by the IRS’s rules. The bad news is that with this new bill, reimbursements are all the help you’ll get covering your expenses while on the road.
“The biggest change is that as of January 1, the ability to deduct any expenses beyond what’s covered by reimbursements is gone,” says Joseph Smith, the head of Travel Tax, a tax preparation company that focuses on mobile professionals. “For some travelers, that’s a significant amount.”
So you can no longer deduct expenses for extra miles traveled beyond your stipend to get to your next placement. You can’t deduct expenses for meals once you’ve exceeded your per diem. Same for housing.
But it’s not just things that are covered by stipends and per diems.
As Smith points out in a downloadable on his site, for those travelers who don’t itemize these tax changes aren’t going to be all that significant. But for others who incur significant expenses when they take a new placement, losing the ability to deduct employment expenses could result in a roughly $660 increase in taxes owed.
And it’s worse for travelers who own a home. Without being able to deduct their business expenses, those travelers may struggle to get their deductions above the new standard deduction of $12,000. Couple that with the loss of the personal exemption, and they are looking at owing roughly $1,500 more in taxes.
Pay attention to state and local representatives
The biggest thing to remember, and something that Smith reminds us of, is that this bill was only signed into law a month ago. While we know what’s in it, there hasn’t been time enough for state local government to modify their tax codes in response to the federal changes. That means you need to be watching what your state and local representatives are doing in the coming months because that will affect your taxes too.
The IRS just released adjusted withholding tables to employers on January 18, and you should start seeing withholding changes by February. The exact date will depend on how quickly your employer can get make withholding changes implemented into its payroll system and how often you get paid.
You shouldn’t, however, have to make any adjustments to the W4 you filed with your employer when you were hired. The new withholding tables have been designed to work with the current forms on file.
The IRS does recommend that you check your withholdings are accurate and is releasing a new online withholdings calculator and Form W-4 soon so you can do that.
For more information on Form W-4 and the new withholdings tables, visit the IRS site.