Travel Nursing Woes: Tackling Tax and Pay Issues

At October’s Travcon Conference, an event for travel nurses and healthcare organizations, two challenges facing the industry consistently generated the most heated discussions: tax issues from working in several states and lack of adequate pay.

During the pandemic, nursing shortages and extreme demand meant that travel nursing firms across the board were paying more than ever before — in some cases, triple what they had been paying pre-pandemic.

Even though the nursing shortage is still very real, travel nursing pay has been cut drastically, and tax issues can complicate their lives. We often work with healthcare staffing firms and can shed light on these issues and what might be done to address them.

Travel Nurse Tax Issues

The “travel” part of travel nursing can be tricky during tax season on both the federal and state levels. One consideration is where to file when working in different states, and another is the tax treatment of how nurses are paid.

Working in different states and making a “tax home.” Travel nurses may work short-term assignments in several different states in a single year. Every state has different laws, and nurses must file a non-resident tax return in each state they work as well as their “tax home.”

A tax home refers to the area where a taxpayer earns income – not necessarily a legal residence. For travel nurses who work away from home most of the year, there are two main options: have a tax home in the area they’ve worked most or return home for at least 30 days out of the year and prove they’re paying expenses (mortgage, rent, utilities, etc.).

Tax treatment of stipends. Travel nurses are paid differently than staff nurses. Staffing agencies will offer a modest hourly base pay and then supplement that with tax-free stipends to cover expenses such as travel and housing while on assignment.

Although this is a great benefit, travel nurses must follow strict IRS tax rules to qualify for tax-free treatment. Another catch is that because the stipends are not taxed, they’re not reflected in annual income. This can become an issue when trying to get a loan, mortgage or disability payment, so it’s vital to get the help of a certified tax professional familiar with the industry.

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Travel Nurse Pay Issues

While the demand for travel nursing is not as severe as it was during the height of the pandemic, there’s still a huge need, but pay issues are now common.

Lower demand. Demand for travel nursing has dropped 42% from January to July of this year, according to Aya Healthcare. This is down from record pandemic highs, and wages have dropped as a result.

 Capping travel nurse wages. Earlier this year, a bipartisan committee proposed that federal agencies investigate prices charged by nurse staffing agencies, arguing that high wages were contributing to the destabilization of the health system. The proposal was to put caps on nurse staffing wages. Staffing advocacy groups are fighting against this change, citing that a cap would be counterproductive to the issue and lead to an even larger shortage of nurses 

What Can Healthcare Staffing Firms Do to Address These Issues?

Clearly these are complicated issues, but there are few things healthcare staffing firms can do to help:

  • Consider accelerated pay rates. Weekly or possibly even daily pay and expense reimbursements can help.
  • Educate your staff. Make sure your employees are aware of possible tax issues, and make it easy for them to stay educated about changing regulations.
  • Provide mental health benefits. Nursing is a demanding job, and the stress of daily tasks along with issues like taxes and pay adds up. Make it easy for your employees to access therapy or other mental health support when they need it.
  • Offer flexible assignments. Mix up contracts far from home with ones close to home. Being away from home for long periods is hard; being a little closer could help. Plus, shorter assignments are less likely to cause tax home issues.

While there are no quick fixes to these issues, healthcare staffing firms can take steps to support the travel nurses doing vital work across the country and continue to improve this growing sector of the staffing world.

MORE: How flexible scheduling can improve nurse mental health

Jeremy Bilsky

Jeremy Bilsky
Jeremy Bilsky is the senior director and general manager at Advance Partners.

Jeremy Bilsky

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