While everyone's specific tax situation is different, in nursing, there are a few key rules and tax savings that could be the difference between writing a check to Uncle Sam or cashing one. While everyone has to pay taxes, you certainly don't want to pay more than you have to. Nurses should learn these basic tax tips. It may save a few tax dollars that could be put to other use.
Expenses you paid for nursing uniforms and scrubs that you wear for work can be tax deductible. Be sure to save your receipts. For your convenience and if possible, you may want to track online, by creating a user id at your online scrubs store.
Expenses paid to launder your scrubs can be tax deductible.
Further, medical equipment, such as stethoscopes and blood pressure monitors and anything that you are required to have to perform your job that is not paid for by your employer can be tax deductible.
If you paid for and are required to wear a certain brand, color or style of nursing shoes or nursing clogs and you only wear them at work, they also can be tax deductible.
Education fees, if required to maintain your job, are tax deductible. For example, if you are required to take nursing continuing education classes and pay for them out-of-pocket, they can be tax deductible. However, they should first be considered for a tax credit, such as the Lifetime Learning Credit.
Lastly, NCLEX fees, licensing fees, union dues, and fingerprinting fees if required by your employer and paid out of pocket by you can be tax deductible.
What is the catch? Two rules need to be met in order to qualify:
1. You can only take these deductions if you itemize your deductions, instead of taking the standard deduction AND
2. The expenses you are deducting must be higher than 2% of your adjusted gross income. For example, if your adjusted gross income is $40,000, only expenses above $800 ($40,000 * 2%) are deductible.
Nurses should keep in mind that tax preparation fees in the year paid, safe deposit, investment, and other miscellaneous expenses and fees can be added in to meet the 2% floor. In the example above, if during the tax year you spend $500 on scrub pants, tops, jackets and laundering fees over the course of the year, $75 on your stethoscope, $100 on union dues and $300 on tax preparation, you could include a $175 ($500 + $75 + $100 + 300 - $800) itemized deduction on your schedule A.
Everyone's situation is different. Consult a tax professional for detailed advice on your situation.