IRS Audits, Travel Nurses, & What You Need To Know
- November 3, 2022
- Ninja News Flash
Travel nurses can be at greater risk of an IRS audit due to the complexity of their job and typical reimbursements they receive from their assignment. IRS audits are always somewhat of a fear for many, but with the right understanding of the elements that increase the risk of an audit, nurses can better protect themselves by being prepared and taking proactive measures.
According to:
- The IRS may want proof of pre-reimbursed expenses
- Your travel nursing AGENCY is getting audited
- Your tax returns are not considered “normal”.
- You received a low taxable income for the year
IRS Audits for Travel Nurses When Staffing Agency is Audited
One of the more obvious risk factors that could increase the chance of an IRS audit is the pre–reimbursement expenses that many travel nurses receive from their agencies. During the 2018 tax season, the IRS sent out numerous letters to both agencies and travel nurses alike inquiring about the reimbursement forms that were issued. It is important for the nurse and the agency to know that all reimbursements must be pre–approved and verified by the IRS.
In addition, if the travel nurse‘s agency is being audited, the nurse may be subject to an individual audit as well. This is because of the presumption that tax information is shared between employers and employees, and it is always best to provide accurate information to the IRS.
Travel Nurses Pay Is Outside of "Normal" and Can Result in an IRS Audit
Another factor that could increase the risk of an IRS audit is if the travel nurse’s tax return is judged to be out of the ordinary or does not fit into the “normal” parameters of tax filing. This could include large deductions with unclear explanations. Although deductions can significantly reduce the amount of taxes owed, if the information sent to the IRS is not sufficient or raises questions, an audit may result.
In the same way, a lower taxable income for the year can also draw extra attention to a return. This is something that nurses should be aware of as many of their temporary housing expenses are fully deductible. For tax filing purposes it may be best to only take the total amount of the expenses and not deduct too much.
IRS Audits Can Go Back 3-4 Years
Travel nurses need to be aware that an IRS audit can happen for any given year from 3 or 4 years ago and it’s important to keep all financial paperwork for that period, including documents that verify pre–approval of reimbursements. Examples of documents that should be maintained include credit card statements, travel nurse contracts, bank statements, pay stubs, and mileage logs.
If an IRS audit is conducted the most important thing that the travel nurse can do is comply with the IRS requests. It may be beneficial to have a tax professional that specializes in travel nursing available to help explain relevant information or offer advice.
Other important things to note are that the IRS does not provide audits over the phone, and asking for a payment plan could prevent potential fines and penalties.
Staying Prepared for an IRS Audit Throughout the Year
Overall, knowing the risk factors and staying prepared is key to minimizing the chances of an IRS audit. Although the process can be intimidating, ensuring that the nurse provides all the information that the IRS requires is the best thing they can do to protect their money.
It is important for travel nurses to understand that they may be at an increased risk of an IRS audit due to the complexity of their job and the associated reimbursements that accompany it.
Potential audits should be taken seriously as it is not uncommon for the IRS to request proof of pre–reimbursed expenses, especially if the nurse’s agency is being audited. Additionally, if the nurse’s tax returns are perceived as outside of the “normal” or they have a significantly lower taxable income result for the year, they could also be subject to an IRS audit.
Prepare for IRS Audits With Organized Record Keeping
- Credit Card Statements
- Travel Nurse Contracts
- Bank Statements
- Pay Stubs
- Mileage Logs
To minimize the chances of an IRS audit, travel nurses should be prepared by having as many relevant documents related to their situation available. This includes credit card statements, travel nurse contracts, bank statements, pay stubs, and mileage logs. It may also be useful to hire a tax professional that specializes in travel nursing as an added source of information for any questions or concerns that may arise.
When in the midst of an audit, the nurse must comply with all requests from the IRS and be sure to meet all deadlines. Failure to do either could result in heavy fines and penalties. Finally, asking the IRS to provide a payment plan could help minimize the severity of the audit and allow the nurse to make reasonable payments until the audit is complete.
Final Notes on IRS Audits for Travel Nurses
Ultimately, being aware that travel nurses are at an increased risk of an IRS audit and knowing the risk factors can help them take the precautions necessary to lessen the possibility of it occurring.
Whether they are just starting out as a travel nurse or are already in the midst of an audit, making sure they are organized and prepared is key. With the proper knowledge and understanding of IRS policies and proactively maintaining the right documents, the risks of facing an IRS audit can be significantly reduced.
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- Date: June 17, 2022
- Publication Site: PRN Healthservices
- Author Name: Emily Larabell
- Credited Full Article Here
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