Traveling Tax Implications

[rcoddman]

I currently live in FL and I am considering starting some traveling. I understand the "tax advantage" program that is often mentioned in this board, but I have not seen anything about the tax implications for travelers who travel from a non wage tax state/city to a wage tax state/city. I am originally from PA and would love to take a job in my hometown of Pittsburgh, but PA and Pittsburgh both impose quite a hefty wage tax unlike FL. The "tax advantage" program certainly helps offset federal taxes but wouldn't help much if you were still obligated to pay state/city taxes on the non-taxed portion of pay (PA=3.07% Pittsburgh=1%). With this in mind, it would make sense to only work in states that don't require state/city wage tax. Does the location (state) of the agency factor into what state you pay taxes? Where does pay check usually originate from: the agency or the hospital)? Is there anybody out there that can address my issue?

[OutWest]

You are an employee of the travel company and paychecks come from them. Taxes are determined based on your legal residence, so lucky you! I believe the tax rules change if you stay at an assignment for 6 months or more.

I have found that most travel companies don't know the tax code. For example, they will allow you to claim the full IRS per diem amount (which includes meals, housing and incidentals) even though you are being reimbursed for housing...double dipping as far as the IRS is concerned. I would advise you to meet with a CPA/tax advisor and find out what is legal and what is not. It may cost you a little but is well worth it.

[ChrisChirdo]

is there an accountant out there that anyone knows of that knows these travel tax laws. that person would make money off doing my taxes and many others.

[stavem]

So how has the traveling tax advantage program worked for you ?? I'm thinking of just starting it, and it's a little like "too good to be true".
I've contacted Kobaly's tax service and they sent me an organizer, which is the most detailed of the 3 I've gotten so far.

I'm really confused about all of this and would appreciate any response or help with it.

[justatraveler]

So how has the traveling tax advantage program worked for you ?? I'm thinking of just starting it, and it's a little like "too good to be true".
I've contacted Kobaly's tax service and they sent me an organizer, which is the most detailed of the 3 I've gotten so far.

I'm really confused about all of this and would appreciate any response or help with it.

#1 DO YOU HAVE A TAX HOME. If you don't forget the tax advantage. That program is NOT an IRS program. It IS a program developed by travel companies to SAVE them money.

#2 It doesn't make any difference how long you work in any given state you have to pay taxes to that state. If you work 13 weeks and have the appropriate amount deducted from you check then you will most probably get it all back. Unlike me, who lives in a heavily taxed state, you won't have to give any of that return to FLA.


#3 I don't know how old you are but please remember that your STD, LTD and SS benefits are a paid as a direct result of your income.
Example: You make #30/hr. $1200 a week. Your diability is usually in the 66% range that gives you $792 per week. Now that is taxed money and you usually have to pay your health insurance out of that to. Even at $30/hour you would get peanuts. Now change your hourly to say $20/hr. $800 a week. 66% is $528 still taxed and paying health insurance. The tax free money you made had better be in a high yield money market account. I can see you needing it. If you do decide to take the tax advantage find out what that company is basing your OT on. $30 or $20 that makes a huge difference.

I did my taxes this past week. I make $35/hour. I work OT. At base of $35 I get $1400 a week. Take home based on my state tax is: $919.19. At $30 it is $801.00 but I got $200 ( $5 x 40) in tax free money. $801.00 + $200 is $1001.00. Sounds good but the $200 only NETTED me $82/week. NOT the $200 they would lead you to believe. Also your 401k is based on base pay so you can't contribute as much. And I believe you can only contribute from earned income not non taxed income.

$82 X 52 equals $4264. Because I used form 2106 and deducted my own M&IE's I got twice that back and the higher take home each week. Do the math.

Good luck. If you care to discuss it with futher you can PM me.

[stavem]

okay. I read your knowledge base on your website.

Here's the situation.
I do have a tax home. No problem there.
I'll be working over 1000 miles away and not returning.
head of household filing status.

Now, if SD has one of the lowest tax burdens, why is the increase so much? My taxable rate offered is $23 and my total hourly rate is $43. Seems kind of high to me. DOes this sound like an "aggressive" tax plan?

I don't plan on doing this for long, and my taxable rate won't be much lower, but a little lower, on my return next year.

I don't get the perdiem rate per state, either, but I see that SD is 60/90. So under your record keeping guidelines, I shouldn't have to keep a record of my food expenses for the 3 months I'm there? What about housing expenses for my rental?

I used to have my yard done in 2004 and part of 2005, but stopped in 2006. Plan on having it done again while I'm gone because i'm gone, so THAT I could claim also, even though I had it done 2 years ago?

Thanks for all the info.

[stavem]

You wrote:

$82 X 52 equals $4264. Because I used form 2106 and deducted my own M&IE's I got twice that back and the higher take home each week. Do the math.

So I SHOULD keep track of my meals, etc for the higher refund/tax advanage?

[justatraveler]

You wrote:

$82 X 52 equals $4264. Because I used form 2106 and deducted my own M&IE's I got twice that back and the higher take home each week. Do the math.

So I SHOULD keep track of my meals, etc for the higher refund/tax advanage?

You don't have to keep track of your meals. You get the deduction every day you are away from home. There are tables on the IRS website that tell you how much to deduct in any given area. Watch out for the changes in those tables in October.

Let's say you work in KY for 13 weeks. Look at the table and find that KY lets you deduct $39/day so that deduction would amount to $39 x 91 ( 7 x 13 =91) = $3549

Then you work in SF and the daily amount for M&IE is $59. So then your deduction is $5369.

And on it goes. Many will tell you to take the money up front. But many times the amount of tax free and your base income don't match up.. I.E. $32 and $100 tax free. That is almost $35 and hour but when you figure the tax on the $32/$100 vs. straight $35
the $100 only gives you about $29 dollars extra a week. Are you gonna save that $29 every week faithfully for when you have an accident and have to go on disability.

Please remember there are short term goals and long term goals

As Joe ( Travel Tax) has said these companies are stretching the fine line they are walking and I can foresee nurse's getting burnt. Big time.

Also, there is an example of this in the IRS pub. I believe it's 463. About a sales man who makes $1000 a week. When he is at home. The IRS says his company can not lower his pay to give him a $100 per diem on the days he is out of town. When he is out of towh he still gets his $1000/wk PLUS his per diem. That is why the tables were made for different areas of the country. So in other words he can't make $900 + $100 out of town. The IRS is not gonna let both the employee and the employer make money off them. Remember when these companies give you tax free money it is also tax free for them. The IRS loses twice.

Private message me if you need more info.:luck:

[stavem]

I don't konw where i got the 60/90 ow whatever either, now.

okay. The rate they're offering is $43/hr with a gurantee of 48 hours. If the max perdiem in SD is $99 per day, the way i work it out is they will be paying me a per diem of $137 day
(43-23*48)/7, right? So they're paying me $38/day over the per diem.

Why, and how do I recoup that except have extra taxes withheld?

AS I under stand the tax code, and apparently I don't at all,
my home state with a rate of 6% (MI) will tax me on the portion that SD doesn't (which is 4%) so MI will tax me on 2%?

Can i just hire you now?

Still trying to see through the forest for the trees!