Traveling Nurses lead an adventurous lifestyle — they get to travel across the country and meet new people while growing their skills. For some travel nurses, there’s just one downside: tax season. Fortunately, you can easily avoid that gloom-and-doom feeling during tax time with a few helpful tips.
Here is what you need to know. First and foremost, you need to understand the difference between being a W-2 employee and a 1099 contractor because the two groups are taxed very differently by the IRS.
What does it mean to be a W-2 employee?
Most healthcare staffing companies classify their travelers as W-2 employees. For travel nurses, this means you can enjoy applicable group benefits, such as a 401(k), health insurance, disability insurance, and life insurance. Additionally, your employer will deduct various state and federal taxes from your paycheck and directly send these taxes to the IRS on your behalf. As a W-2 employee, you’ll find your tax return will be fairly straightforward because you’ve been paying these taxes all year long.
So, what’s a 1099 contractor?
Then, there’s the 1099 contractor, which is an IRS classification primarily used for freelancers, entrepreneurs, and small business owners. As a 1099 contractor, you can claim several tax deductions that W-2 employees cannot. To do so, however, you must track all your job-related expenses and income throughout the year. While the responsibility to report and pay your taxes falls on you, you could also reap the rewards in the form of a large refund check come spring.
Regardless of how you’re classified, you should also keep in mind the following tax essentials:
- Keep a copy of all your travel contracts: Your contracts prove where you worked and for how long.
- Prepare for tax season early: It’s easy to put off your taxes and record-keeping until the final deadline. However, try your best to stay ahead throughout the year to avoid unnecessary stress at tax time.
- Retain all tax-related documents for at least seven years: When you do, you’ll be able to quickly prepare future or amended tax returns to the IRS.
- Consider finding a tax expert to help you: Filing your taxes can be a difficult process to manage even when you aren’t constantly on the road for your job. A tax expert can ensure your tax return is done correctly and on time