The New Tax Plan and Travel Nursing

taxes

Soon we will be at the end of 2018.  As we move into 2019 we start to prepare for tax season.  December means the end of one year and then the beginning of a new year and tax time.  Do you want to know what to expect with the new tax plan?  As most of you know December 22 of 2017 the “Tax Cuts and Jobs Act” was signed into law.  The new law made the most significant tax changes this country has seen in over 30 years.

As you begin thinking about filing your taxes after let’s look at how these changes affect the travel nurse industry? As you are aware the law will affect each person differently based on filing status, deductions and income level.   Overall it cuts the tax rates and increases the standard deduction.  Many of you have expressed concern because it reduces the itemized deductions.

More significant are the changes to business and child and elder care.

As a Travel Nurse, How do the Changes Affect You?

The new changes take went into effect on January 2018.  The changes did not affect taxes you filed April 2018 since this filling was based on 2017 tax law.

It did affect the take-home pay for most U.S. taxpayers.  You probably saw a slight increase in your paycheck.  If you are one of some 70% taxpayers who claim a standard deduction you may have seen an increase.   When income taxes are lower employers will take out less money.

From an Expert

My go-to site for Travel Tax advice is Traveltax.com owned by Joseph Smith a former traveling Respiratory Therapist.  You can find the answers to most of your questions and a useful workbook to prepare for your taxes.

What is affected?

  • Not affected are per diem and stipends.  You will still be able to get housing stipends, meal allowances, travel pay and other reimbursements.
  • No longer allowed on 2018 filling are expense deductions (travel related expenses, mileage, CEU’s Licences, uniforms etc).
  • The remaining amount of GSA allowable per diem amounts are not deductible.

Will travel nurse pay packages be affected?

  • Travel nursing agencies may adjust the structure of a pay package.
  • With mileage, licenses and CEU’s no longer deductible you may see smaller housing allowance.
  • There may be a shift to other categories of a pay package.

Independent contractors will be affected. 

The new Tax Cuts and Jobs Act allows a 20% deduction for pass-through income to include sole proprietorships, partnerships, LLC and S corporations. Independent contracting may be more profitable with the pass-through deductions allowances.

As an independent contractor, there is much more paperwork and can only be accomplished under the right circumstances. MAny travel nursing agencies will not work with independent contractors.

Other changes that affect all taxpayers

  • Child tax credit increases to $2000 and the refundable portion of the child tax credit is increased to $1,400.
  • The standard deduction increases to $12,000 for individuals and to $24,000 for married couples filing jointly.
  • The personal exemption will no longer apply under the new tax law.
  • Penalties for not having health insurance under Obamacare no longer exist under the new tax law.

The New Federal Income Tax Brackets

Single Filers: 

  • 10%: $0 to $9,525 of taxable income for an individual
  • 12%: $9,526 to $38,700
  • 22%: $38,701 to $82,500
  • 24%: $82,501 to $157,500
  • 32%: $157,501 to $200,000
  • 35%: $200,001 to $500,000
  • 37%: over $500,001

Married-Joint Filers: 

  • 10%: $0 to $19,050 for married joint filers
  • 12%: $19,051 to $77,400
  • 22%: $77,401 to $165,000
  • 24%: $165,001 to $315,000
  • 32%: $315,001 to $400,000
  • 35%: $400,001 to $600,000
  • 37%: Over $600,000

As a Travel Nurse, what changes should you make

  • Negotiate for higher reimbursement payments from the agency
  • Use agencies that reimburse for licenses
  • Invest in a ROTH IRA  rather than a tax-deferred 401K or 403B due to the lower tax rates

As we get closer to time for filing you should consult your financial advisor for the most up to date information.  For information on how the new tax laws affect the travel nursing agencies check out an article written by Joseph Smith on the issue.

Are you looking for your next assignment?  Take a look at our jobs page.

 

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Cheryl Roby, RN

Cheryl J. Roby is a retired RN and US Army Nurse Major. She has over 30 years of nursing experience and 26 years of military experience in the Army Nurse Corp. During her nursing career she has traveled as part of her military experience visiting many of the 50 states and once to South Korea. Her medical training began during the Vietnam era when trained as an army medic. She went on to train as an OR tech and then as a LVN/LPN. She completed nursing school and was direct commissioned into the reserve Army Nurse Corp. nurse. She appreciated the challenge of working in various specialties and expanding her clinical and professional skill sets. Her time in the Army Reserves and California National Guard gave her the opportunity to travel to most of the 50 states and working in other medical facilities. During her career she spent years as an OR nurse, Occupational Health Nurse, Hospice Nurse, Forensic Nurse, Nurse Case Manager for developmental disabilities, Parish Nursing as well as being a Nurse Entrepreneur.

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