Tax Free Pay and The Distance Rule
Want to make the most money on your next travel nursing assignment? Of course you do! In this post, we will cover the prerequisites of tax free pay, what taxable wages are set at and how the IRS ties in to all of it. Here are a few frequently asked questions to help you when deciding on your next assignment.
I live more than 50 miles away, so I’m qualified, right?
I wish it were that easy! The “50 mile rule” is actually something set by the facility in order for the agency to use “local bill rate” or “travel bill rate”. It does not, however, determine if you will get the tax free pay at all. In order to be considered a traveler, you must be duplicating your living expenses. Driving 100 miles one way to an assignment may feel like you’re traveling for work. However, if you’re going home at the end of the shift, all of your wages would be taxable.
TravelTax says it best, “It is not distance but what you do at the end of the shift that determines if the assignment is far enough away to qualify as a travel assignment.” (TravelTax, 2018) So, it could be in your favor to kick up your feet and enjoy the free hotel continental breakfast along with your full tax free weekly stipend.
Why is my taxable wage $20?
Uncle Sam knows that an RN makes at least $20/hr. We’ve found that this amount is claiming enough for tax purposes that there will be no red flags when it comes to tax season, but it’s also claiming less than a standard staff position to ensure you can still benefit from the tax free stipend. Also, we’re trying to keep you in a good spot financially when it comes to future plans of buying a new car or house since banks can only use taxable wages while seeing if you qualify for a loan. We have your back and want to set you up for success, so $20/hr is what our team (financial/accounting/legal) has deemed to be appropriate in our pay quotes to keep you safe from audits and also lets you take advantage from the tax free weekly stipends.
Why isn’t my tax free stipend the full amount per IRS Guidelines?
The starting point of a pay quote is generated by what the facility is offering for their bill rate. Agencies should all be using the IRS Guidelines per city/state while creating a pay package to ensure that you are within the legal limit for that area, (https://www.gsa.gov/travel/plan-book/per-diem-rates). However, it all comes back to what the facility is offering and how we can rearrange the numbers to make sure you’re getting the best offer available.
As recruiters, we WANT you to be making bank on your assignment. You’re packing up your car, leaving friends and family, and driving cross country for a 13 week assignment. Therefore, our purpose is to make sure that you are taken care of in the process. We’re taught as children to never talk about money, but in the travel world it’s second nature. That’s why it’s important to understand some of the basics of what goes in to a pay quote. When in doubt—ASK! That’s what we’re here for.
“Oh, the places you’ll go.” – Dr. Seuss