What happens when a Respiratory Therapist double majors in Accounting? The answer is TravelTax, a company that specializes in preparing tax returns for traveling professionals. I had the opportunity to sit down with Joseph Smith, the founder of TravelTax, to ask a few questions on what traveling healthcare professionals should be prepared for when filing taxes and starting their career as a traveler. Although this is a very informative article, please refer to a tax professional before filing taxes.
Joseph Smith and his wife had always been interested in traveling. After graduating with his Respiratory Therapy (RT) and Accounting degrees, Joseph and his wife set out to northern Minnesota for his first RT travel assignment. When it came to his first tax season as a traveler, Joseph was in luck. He already had experience filing taxes in multiple states, as he had been working per diem across the state border. He also had rental property; therefore he was used to a complex tax return. During that first travel season, a couple of coworkers found out that Joe had an Accounting degree. “They said, ‘Joe, I hear you have an Accounting degree…can you do these taxes for me? I’ll pay you whatever you need.’” And that’s how it started. From 1991 to 2000, Joe’s tax services spread by word of mouth. To Joe, it was still just a hobby he helped out with during tax season. However, in 2001, Joe responded to a tax question featured in Healthcare Traveler. The publishers of the magazine liked Joe’s answer so much, that they asked him to start writing articles for the magazine. In 2002, Joe built a website and the company went national. “I never intended this to happen, but it’s a testimony to how little this information is known between recruiter and staffing firm and traveler.”
This exception to the rule looks at the following tests listed below and at least two of the three apply for the exception to be permitted:
1) Have regular employment in that area. This means that part of your yearly employment must happen in the area of your tax home, and you must reside at that tax home while you are working. 2) Have a permanent residence (physical residence) at your tax home and are financially responsible for that residence’s upkeep (rent/mortgage/taxes/repairs) while you are away from home. 3) You have not abandoned your tax home. This means that you plan on returning to your tax home, and that you are there at least 30 days a year.
To be safe, don’t stay in any one place longer than 12 months in the last 24 months. If you have a majority of your income from a specific location that is NOT your tax home, that will trigger a tax home change. This means that if your tax home is in Omaha, but you take travel assignments in Tampa for a total of 13 months out of the last 24, your tax home will change to Tampa. This is because the majority of your main source of income occurred in Tampa. If you do not keep a tax home, unfortunately, you are unable to receive the full benefits of being a traveler (i.e. tax-free stipends and housing stipends). This means that all stipends become taxed, and can end up costing more than you realize.
As you can tell, there is a lot to keep in mind when embarking on a travel assignment. Most travelers will wonder what receipts and documents that they need to keep track of while on assignment. Joe said that a better list is what you shouldn’t keep. Gas and meal receipts are not necessary to keep, as you’ll be using a standard mileage and meal rate. Credit card and bank statements are also not accepted in audits, as you’ll need the specific receipt for each expense. Those kinds of statements don’t tell what, where, when, and why. “A credit card statement may tell ‘hotel room’, but not what kind of hotel room. You may have stayed in a presidential suite, which is not necessary for you.” You can keep yourself a bit more organized by scanning paper documents onto the computer, rather than keeping a shoebox full of papers. TravelTax.com has a list of documents to keep and provide when filing taxes, so be sure to check it out here.
It would be easy to write an entire book on the ins and outs of taxes as a traveler, but I recommend speaking with the experts themselves. If you are a traveler looking for someone to file your taxes, I strongly encourage you to speak with the team at TravelTax. Many tax firms are not accustomed to filing taxes for more than one state, and Joe and his team often have to clean up the messes made by incorrect tax forms. If you would like more information, please contact Joe at traveltax.com with any questions.
