Deducting Travel Expenses - part 2

Joseph Smith EA is the author of this column. He happens to be PanTravelers CFO, and is the leading tax expert in the country for traveling healthcare professionals and agencies. A former traveling respiratory therapist, he now has a thriving tax preparation and consulting business. He is also a regular contributor to Healthcare Traveler magazine and is a helpful presence on traveler forums such as Travel Nurses & Therapists. Joe maintains one of the best traveler resources at traveltax.com.

After accepting a new assignment, the fun begins. Most will drive their own car and enjoy the sights along the way; others will fly to the assignment and get a rental car or even take the train. All of these transportation expenses are deductible so long as travel is not personal in nature.

Getting there

First, you have to get to the assignment. If you use your own car, you can use the standard mileage allowance (50 cents a mile in 2010), the price of the airfare or the cost of alternative transportation like a train. Generally, your agency will give you a tax-free travel allowance (travel pay) but this is often limited and does not cover all the deductible costs of the trip. The difference between your expenses and the reimbursement are deductible so keeping those records are important. For example, if you live in New York and take an assignment in Denver 1800 miles away, using the standard mileage rate gives you a $900 deduction each way. If your travel pay is limited to $500 one way, you can deduct $800 for the entire trip, the difference between the cost and the travel pay. Throw in three nights of lodging and the amount grows.

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