Should You File an Extension? A Common Traveler’s Tax Tale
By Joseph Smith, EA, MTax, contributor
It is March and you still have time to assemble your tax documents, and so long as the calendar still says March, you are reassured that there is plenty of time.
Some tax documents are piled on the kitchen table, mingling with bills and junk mail. Your Gmail inbox has links to tax documents along with messages from friends, invitations to parties, assignment news from your recruiter, and pics of your sibling’s pets that you must see.
Your web browser has links to bank statements and your W2s, and the passwords are stored in a file that is either on the desktop or on that flash drive that you cannot find. Among hundreds of text messages, there is one from your friend who texted you about some mail you received labeled Important Tax Documents and does not know if you want it scanned or forwarded.
Your voicemail has messages from friends, the latest pitch for political action and a message from your parents about some important looking letter they received…but it’s March, so we can deal with all of that later.
April 1 arrives and the security of filing your travel nurse taxes next month is gone. You realize you have to get it done this weekend Since you worked in three states last year, you know it’s going to be different.
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The do-it-yourself route
The weekend arrives. After three night shifts in a row, you are ready for some fun and go out with other travelers Friday night. Saturday morning you just want to rest and go for a walk. You remember the tax stuff and decide that you will do it on Sunday.
Sunday arrives and some fellow travel nurses are going out for late lunch. You’ll still have the evening to work on this. At 5 pm, you go into a crowded Wal-Mart to buy the tax software and see that there are two editions. You also note that there is an extra charge for the other two states that you have to file in, but you have to do this soon so you buy the Ultra Max version since you know that should handle your return.
At 9 pm you sit down to load your tax software into your laptop. After remembering that you don’t have a CD/DVD drive, you discover the secret code that allows you to download it online. You start gathering your tax documents and forget which device has the link to the W2s. You realize that you can log on to your employer portal, but you worked with three travel nurse agencies last year and cannot remember your passwords.
You saved one of them on the back of a receipt from Outback Steakhouse and it is stuffed in your bag. When you can’t find it, you dump all the contents on your bed and find 10 other receipts from your travel assignments.
Finally, you have all the W2s and you start reading the instructions to find where to enter the information from those extra states. The questions that the software asks are confusing. After an hour of wading through input forms, you finally have the W2s entered. You find you owe.
Panic sets in. You can’t handle this – you have always had refunds and you start looking for someone to do your taxes for you.
The last-minute tax preparer
Everyone you call Monday morning is booked through April 15 but the Tax Chain down the road can get you in Thursday morning after your night shift.
“Do you know how to do travel nurse taxes?” you ask. “We handle all kinds of clients!” the receptionist replies.
Meanwhile, you gather all the items you think the preparer will need, relieved that someone will do this for you.
After an eventful Wednesday night shift, you arrive at the Tax Chain on Thursday morning and the preparer is surprised by all your W2s. You tell him about your job and he asks how many days you spent in each state. He is certain you are now a resident of this state since you have been there for two months.
“But I have a compact nursing license and have to file as a resident in my home state or they will not renew my license,” you reply.
“But you are a resident of this state; you have been here 60 days and you were in the last state more than 30 days … I’ll have to file you as a part-year resident in each state that you worked in … And, you know, I have not done a Massachusetts tax return. Out here on the West Coast we don’t see many of those. I’ll have to get my supervisor’s help …”
You realize this isn’t going well. What should you do?
File an extension and find someone who knows what they are doing!!
Seriously, extensions do not cost anything and give you until October 15 to file your return. Extensions do NOT extend payment deadlines, but if you normally have refunds, you should be fine. However, travelers from high tax states often owe their home state so that would be the one place you may have to send extra payments.
About the author:
Joseph Smith is an IRS enrolled agent (EA) with a master’s in taxation, and a former travel respiratory therapist whose firm, TravelTax, provides tax preparation and audit representation for the mobile professional.
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