Tax Tips for RTs
The first of the year has come and gone, and it is time now to start thinking about everyone's favorite subject; income taxes. Talking with some of my friends, I notice there is a lot of confusion about taxes.
Now, you should note that I am not an accountant, a CPA, or a tax professional. I am a guy who has made a living traveling throughout most of his adult life, either with the military or as a respiratory therapist. It is always best to consult a tax professional because each state has their own set of rules, and at times, will interpret the federal regulations differently. I want to introduce you to two terms that could save you some confusion; tax home and reimbursement.
Your tax home is an area where you live. If you take your physical address and draw a circle around it approximately 60 miles out, that is your tax home. Why is this important? Many of us would like to claim mileage reimbursement. Good plan, but if your mileage is within your tax home, it is not eligible to be listed as a deduction on your income taxes. That is a part of doing business. So, particularly for you travelers and "prn" folks, even if you drive all the way across your city to work, unless you go outside that 60 mile radius on your map, the gas you use is just something you have to absorb as the cost of having that job. The other thing you must look at is whether or not you were reimbursed. Travelers often travel far outside their tax home, but if your travel company reimbursed you for your mileage, then that mileage is not eligible to claim on your taxes. Anything you are not reimbursed for, such as if you travel 600 miles but your travel company only reimburses the first 400, may be tax deductible. Most travel companies have someone you can talk to about your taxes.
Reimbursement can mean the difference between paying taxes and getting paid taxes. All year long, if you bought a pen to use at work, if you buy a new lab coat, a new set of scrubs, or anything else your facility does not pay you for, it can be listed on your taxes as a deduction in most cases. Some jobs required specific clothing and may provide you with a clothing allowance, wiping out your tax deductions. If this is not the case for you, keep those receipts (in case of audit) and deduct those expenses from your personal income tax at the end of the year.
In my opinion, we need to optimize our profits personally. That is why I went back to get my MBA. I wanted to better understand not only how to make more money, but how to keep more of that money in my pockets. Again, as I have said before, the devil is in the details. For instance, if you plan on deducting mileage, you must keep a log book of every trip you take anywhere, including the grocery store and the bicycle shop, unless you have one car that you always use for work. Research what your state requires. Talk to a tax professional. Make sure you are maximizing your profits for the important work that you do, and keep more of that money in your pocket instead of giving it to Uncle Sam.
That's just my opinion,
Jim Thacker, MBA, MHA, CRT, AE-C