D K Snyder Financial Services, LLC

01/20/2022

Tax Information for Healthcare Travelers
(nurses, PT, RT, etc)

At tax time there are a few things traveling healthcare workers need to remember for tax purposes. I will delineate some helpful information here.

Tax Home

The IRS defines your tax home as your regular place of income. This is not necessarily your home per the IRS. For this reason it is a good idea to try to keep at least a per diem position in the immediate area of your home/residence.

If you don’t have a regular or main place of business or work, use the following three factors to determine where your tax home is:
1. You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.
2. You have living expenses at your main home that you duplicate because your business travel requires you to be away from that home.
3. You haven’t abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. ‍
If you satisfy all three factors, your tax home is the home where you regularly live. If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only one factor, you are an itinerant worker; your tax home is wherever you work, and you can’t deduct travel expenses. ‍

4 Healthcare Travelers Tax Home Rules
1. Duplicate expenses at fair market value (and have proof!) It’s not enough to just travel away from your tax home. Healthcare travelers actually have to prove that they are duplicating expenses. Essentially, they are paying for their tax home and paying for housing at their new temporary residence. The most common circumstance is renting both places or owning a home and renting your second residence.

2. Travel far enough away from your tax home that you actually need a second home (50 miles is a myth). There is no rule on mileage. Go back to why you are getting a housing stipend? You’re getting it because you’re being reimbursed for duplicate expenses that you have on an assignment. The rule is that you have to be far enough away that it requires you to sleep there, and you spend money on lodging. 50 miles? Yes, some facilities or agencies may require you to be a certain distance because they are paying you a traveler rate (aka, the big bucks!), but this has nothing to do with the tax laws.
3. Don’t abandon your tax home. Keep strong ties to where your tax home is! Go home at least 30 days a year. “30 days is, by an extension of all sorts of IRS rulings, looked at as a baseline. You want to be home for about a month every year, and that doesn’t have to be at the same time. You can break it up. It’s actually more convincing to me if somebody comes home in between gigs or during gigs than just for Christmas…” Also, a few ways to prove you haven’t abandoned your home is by keeping your driver’s license, registration, insurance, and voter’s card there. Using your credit card while your home is smart too.

4. Keep moving, don’t stay in one area for more than a year. Let’s go back to the definition of a tax home. It’s our regular place of income. If we build regular income in a new area, eventually, that new place will become our tax home. (Eventually = at that 12-month mark!) Be a traveler and travel! Act exactly like you would if you were on a 13-week business trip. If you were just on a business trip, you would not be changing your driver’s license, you would not be moving all your things, and you would go back home when you can.

Stipend
A fixed amount of money, or lump sum, paid periodically in order to cover expenses.
Stipends are tax-free when they are used to cover duplicated expenses. They cover typical living expenses such as lodging and meals and incidentals. These stipends do not have to be reported as taxable income if you can prove this duplication of living expenses.
Note: If you rent out the entirety of your permanent residence while you are away on assignment, the IRS will consider it a business property and not a residence. Therefore, It will no longer satisfy the third requirement of a tax home (the only exception is if you rent it out for fewer than 15 days of the year) and not qualify for a non-taxable stipend.
You may rent out the home as long as you keep a portion of the home for personal use as a place for you to stay in between assignments. Another option to be able to claim your tax residence would be to rent it out as a short term vacation spot (for example, via Airbnb or VRBO) as long as it is not for the entire twelve months and show proof that you intermittently use it for lodging in between assignments.
The IRS states that this is still considered a residence, “If the taxpayer uses it for personal purposes during the tax year for more than 14 days or 10% of the total days rented to others at a fair rental price; [also] rental expenses cannot be more than the rent received.”
There are some ways to offset expenses at your permanent residence with income, while still being able to claim it as a tax home. If you choose to rent year-round, you may report certain expenses (maintenance, insurance, and interests) as deductions to reduce the total amount of rental income subjected to tax (IRS Pub 527). ‍

Your listed bill rate typically takes all of this into account. A $65 per hour pay rate works out to closer to $20 per hour of taxable income, with the rest representing the non-taxable aspect. You may designate the rest of those wages to cover your working expenses. This designation (stipend) is often determined by your contract. The agency you are working with may handle this differently, and you should feel free to ask your Healthcare Recruiter to clarify how this works for you.

Keep all your documents together
A common mistake with healthcare travelers is that they don’t save their documents. If you’re wondering which documents to keep track of, here’s a handy list. (Note: these should be saved for six years in case of an IRS audit)
• Copies of all contracts
• Mileage log
• Receipts (except grocery/food receipts and gas receipts)
If you are audited you will need this information to prove to the IRS that you actually had a tax home and had duplicate expenses thus making your stipend non taxable income.

Also remember you must file a non resident tax return for each state you work in as well as your home state return. Some border states (Ohio, Kentucky, WV for example) have reciprocal agreements and if you have the home state withheld you may not have to file a nonresident return.

12/22/2021

IRS issues information letters to Advance Child Tax Credit recipients and recipients of the third round of Economic Impact Payments; taxpayers should hold onto letters to help the 2022 Filing Season experience

WASHINGTON — The Internal Revenue Service announced today that it will issue information letters to Advance Child Tax Credit recipients starting in December and to recipients of the third round of the Economic Impact Payments at the end of January. Using this information when preparing a tax return can reduce errors and delays in processing.

The IRS urged people receiving these letters to make sure they hold onto them to assist them in preparing their 2021 federal tax returns in 2022.

Watch for advance Child Tax Credit letter

To help taxpayers reconcile and receive all of the Child Tax Credits to which they are entitled, the IRS will send Letter 6419, 2021 advance CTC, starting late December, 2021 and continuing into January. The letter will include the total amount of advance Child Tax Credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.

Families who received advance payments will need to file a 2021 tax return and compare the advance Child Tax Credit payments they received in 2021 with the amount of the Child Tax Credit they can properly claim on their 2021 tax return.

The letter contains important information that can make preparing their tax returns easier. People who received the advance CTC payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov.

Eligible families who did not receive any advance Child Tax Credit payments can claim the full amount of the Child Tax Credit on their 2021 federal tax return, filed in 2022. This includes families who don't normally need to file a tax return.

Economic Impact Payment letter can help with the Recovery Rebate Credit

The IRS will begin issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter will help Economic Impact Payment recipients determine if they are entitled to and should claim the Recovery Rebate Credit on their tax year 2021 tax returns that they file in 2022.

Letter 6475 only applies to the third round of Economic Impact Payments that was issued starting in March 2021 and continued through December 2021. The third round of Economic Impact Payments, including the “plus-up” payments, were advance payments of the 2021 Recovery Rebate Credit that would be claimed on a 2021 tax return. Plus-up payments were additional payments the IRS sent to people who received a third Economic Impact Payment based on a 2019 tax return or information received from SSA, RRB or VA; or to people who may be eligible for a larger amount based on their 2020 tax return.

Most eligible people already received the payments. However, people who are missing stimulus payments should review the information to determine their eligibility and whether they need to claim a Recovery Rebate Credit for tax year 2020 or 2021.

Like the advance CTC letter, the Economic Impact Payment letters include important information that can help people quickly and accurately file their tax return.

More information about the Advance Child Tax Credit, Economic Impact Payments and other COVID-19-related tax relief may be found at IRS.gov.

As the 2022 tax filing season approaches, the IRS urges people to make sure an accurate tax return and use electronic filing with direct deposit to avoid delays.

Pay your taxes. Get your refund status. Find IRS forms and answers to tax questions. We help you understand and meet your federal tax responsibilities.

05/02/2021

😁😁😁

02/19/2021

Here are some common errors taxpayers should avoid when preparing a tax return:

-Missing or inaccurate Social Security numbers. Each SSN on a tax return should appear exactly as printed on the Social Security card.
-Misspelled names. Likewise, a name listed on a tax return should match the name on that person's Social Security card.
-Incorrect filing status. Some taxpayers choose the wrong filing status. The Interactive Tax Assistant on IRS.gov can help taxpayers choose the correct status especially if more than one filing status applies. Tax software also helps prevent mistakes with filing status.
-Math mistakes. Math errors are some of the most common mistakes. They range from simple addition and subtraction to more complex calculations. Taxpayers should always double check their math. Better yet, tax prep software does it automatically.
-Figuring credits or deductions. Taxpayers can make mistakes figuring things like their earned income tax credit, child and dependent care credit, and recovery rebate credit. If someone is eligible for a recovery rebate credit – and either didn’t receive Economic Impact Payments or received less than the full amounts – they must file a 2020 tax return to claim the credit even if they don’t usually file. The Interactive Tax Assistant can help determine if a taxpayer is eligible for tax credits or deductions. Tax software will calculate these credits and deductions and include any required forms and schedules.
Incorrect bank account numbers. Taxpayers who are due a refund should choose direct deposit. This is the fastest way for a taxpayer to get their money. However, taxpayers need to make sure they use the correct routing and account numbers on their tax return.
Unsigned forms. An unsigned tax return isn't valid. In most cases, both spouses must sign a joint return. Exceptions may apply for members of the armed forces or other taxpayers who have a valid power of attorney. Taxpayers can avoid this error by filing their return electronically and digitally signing it before sending it to the IRS.
Filing with an expired individual tax identification number. If a taxpayer's ITIN is expired, they should go ahead and file using the expired number. The IRS will process that return and treat it as a return filed on time. However, the IRS won't allow any exemptions or credits to a return filed with an expired ITIN. Taxpayers will receive a notice telling the taxpayer to renew their number. Once the taxpayer renews the ITIN, the IRS will process return normally.

02/18/2021

What taxpayers need to know about claiming the credit for other dependents

Taxpayers with dependents who don't qualify for the child tax credit may be able to claim the credit for other dependents.

The maximum credit amount is $500 for each dependent who meets certain conditions. These include:

Dependents who are age 17 or older.
Dependents who have individual taxpayer identification numbers.
Dependent parents or other qualifying relatives supported by the taxpayer.
Dependents living with the taxpayer who aren't related to the taxpayer.
The credit begins to phase out when the taxpayer's income is more than $200,000. This phaseout begins for married couples filing a joint tax return at $400,000.

A taxpayer can claim this credit if:

They claim the person as a dependent on the taxpayer's return.
They cannot use the dependent to claim the child tax credit or additional child tax credit.
The dependent is a U.S. citizen, national or resident alien.
Taxpayers can claim the credit for other dependents in addition to the child and dependent care credit and the earned income credit. They can use the IRS Interactive Tax Assistant, Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents?, to help determine if they are eligible to claim the credit.

02/17/2021

Incorrect Form 1099-G for unemployment benefits
Millions of Americans received unemployment compensation in 2020, many of them for the first time. This compensation is taxable and must be included as gross income on their tax return.

Taxpayers who receive an incorrect Form 1099-G for unemployment benefits they did not receive should contact the issuing state agency to request a revised Form 1099-G showing they did not receive these benefits. Taxpayers who are unable to obtain a timely, corrected form from states should still file an accurate tax return, reporting only the income they received.

02/16/2021

02/16/2021

Double-check for missing or incorrect Forms W-2, 1099 before filing taxes

WASHINGTON — With some areas seeing mail delays, the Internal Revenue Service reminds taxpayers to double-check to make sure they have all of their tax documents, including Forms W-2 and 1099, before filing a tax return.

The IRS reminds taxpayers that many of these forms may be available online. When other options aren’t available, taxpayers who haven’t received a W-2 or Form 1099 should contact the employer, payer or issuing agency directly to request the missing documents before filing their 2020 federal tax return. This also applies for those who received an incorrect W-2 or Form 1099.

Those who don’t get a response, are unable to reach the employer/payer/issuing agency or cannot otherwise get copies or corrected copies of their Forms W-2 or 1099 must still file their tax return on time by the April 15 deadline (or October 15 if requesting an automatic extension). They may need to use Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. to avoid filing an incomplete or amended return.

If the taxpayer doesn’t receive the missing or corrected form in time to file their tax return by the April deadline, they may estimate the wages or payments made to them, as well as any taxes withheld. Use Form 4852 to report this information on their federal tax return.

If the taxpayer receives the missing or corrected Form W-2 or Form 1099-R after filing their return and the information differs from their previous estimate, they must file Form 1040-X, Amended U.S. Individual Income Tax Return. For additional information on filing an amended return, see Topic No. 308 and Should I File an Amended Return?

Taxpayers should allow enough time for tax records to arrive in the mail before filing their 2020 tax return. In a normal year, most taxpayers should have received income documents near the end of January, including:

Forms W-2, Wage and Tax Statement
Form 1099-MISC, Miscellaneous Income
Form 1099-INT, Interest Income
Form 1099-NEC, Nonemployee Compensation
Form 1099-G, Certain Government Payments; like unemployment compensation or state tax refund

02/13/2021

How to decide whether to file a tax return
In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules may apply if the taxpayer is self-employed or can be claimed as a dependent of someone else. There are other reasons a taxpayer must file. The Interactive Tax Assistant can help someone determine if they the need to file a return.

If the answer to any of these questions is yes, a person might be due a refund, but they must file a tax return to get their money.

Did an employer withhold federal income tax from their pay
Did the person make estimated tax payments?
Did they overpay taxes in 2019, and have their refund applied to 2020 taxes?
Some individuals may qualify for the recovery rebate credit
Most people who are eligible have already received the full amount for the recovery rebate credit as Economic Impact Payments. Some people may be eligible to claim the recovery rebate credit if they didn't get Economic Impact Payments or received less than they were entitled. People must file a tax return to claim the recovery rebate credit even if they aren’t normally required to file. Those who don’t normally file taxes can use IRS Free File to claim this credit. The maximum Economic Impact Payments for qualifying individuals were:

$1,200 per person and $500 per qualifying child for the first payment
$600 per person and $600 per qualifying child for the second payment
If they’re eligible for the recovery rebate credit, people will need the amount of any EIPs they received to calculate their credit amount using the RRC worksheet or tax preparation software. Individuals with an account on IRS.gov can view the amounts of the Economic Impact Payments they received.

Some may benefit from education credits
People who pay certain higher education expenses may qualify for one of these two education credits even if they don't owe any taxes.