PRN Work As A Traveler
Disclaimer
(I will reference our tax professional TravelTax, who I receive no compensation from in any form. This information is our opinion. It is not professional advice and should not be taken as such. TravelTax is in no way providing professional tax advice through the information provided in this post. It is informative only and they ask that you contact them directly for any questions you may have.)
lets begin
Have you thought about taking a PRN job as a traveler? We have! We have seen a lot of questions on travel therapy posts regarding PRN work, and we thought now would be a good time to share what information we have on this subject since jobs are slow in the travel therapy world.
Trying to land a job during Covid-19 is like Kari trying to catch a fish………IT AIN’T HAPPENING
PRN work in Alaska….and our status as itinerant workers
Our first experience with PRN work was on our very first travel assignment. At that time in our career we didn’t have a tax home and we were known as itinerant workers. If you aren’t familiar with this term, basically we were fully taxed in every location we worked. We didn’t claim living or meal per diems. Due to our status as itinerant workers, from our understanding, we didn’t have limitations regarding PRN work. There was no fear of our tax home being switched to a new location and we could make significant income in any economic area without this fear.
Why did we take a PRN job in the first place? We knew we would be in Alaska for a minimum of 6 months and Kari wanted to keep her experience in the acute care setting up-to-date. This was helpful not only for her experience, but for the extra income.
Once leaving Alaska, we eventually had to return to California to re-establish our tax home, ditching our itinerant worker status and claiming the living and meal per diems.
How does it work for a traveler who receives living and meal per diems
Remember, this is based on two travel PTs who are married and filing jointly. Your situation may differ as a solo traveler (which we dive a littler deeper into below).
Our second experience with PRN work was in Houston Texas when Kari had a 13 week contract and I (Tyler) did not. I thought if I couldn’t land a travel contract I could work PRN. What became an issue as a married couple, and filing jointly, was that Kari was accepting living and meal per diems, and if I were to accept a PRN position, it would appear that I was being paid a fully taxed wage. Therefore appearing I was not a traveler. It’s unclear how this would affect us long term, but our tax professional assured us, this was not ideal and their first suggestion was to not take the PRN position if possible. The next best option was to have a written statement, clarifying a start and end date, in my PRN contract, much like a 13 week contract. But why?
The way it was explained to us was that a PRN position is inherently implying that you are local, and willing to be called to accept work at any given time. That may not always be the case, but as there is no specific end date, it also appears to the IRS that you are intending to be in a given area for a longer duration. Therefore the end date is important to have clarified in writing when traveling as a pair.
How does this apply to solo travelers?
Kayak fishing on Bunganut Pond (Maine)
As a solo traveler, the reasons that come to mind for PRN work include
PRN as a way to increase income while on assignment
If you are maintaining your tax home then a PRN position shouldn’t cause a problem “if only done while on assignment”, per TravelTax. That was a specific question we had answered and from what I understand, it again comes back to maintenance of your tax home.
Taking a PRN job because you can’t land a contract
The same goes for taking a PRN job because you can’t land a contract. It is important to make sure you don’t make significant income through a PRN job that could then appear as your permanent tax home. We will get more specific below on what is significant income.
PRN work locally (near your tax home)
This shouldn’t cause an issue because it is only reinforcing your tax home status.
“The most important issue is the maintenance of the tax home.”
More on working prn
“The problem we see most often is when they [the traveler] fail to secure the tax home and keep returning to the same area for a PRN job” -TravelTax
From our perspective this makes a lot of sense. If you are returning to a specific area for PRN work regularly, this can begin to look like a “permanent tax home” as defined by a specific area you are working consistently. It now becomes an issue where you need to look and see how much money you are making in each area.
Per our discussion with TravelTax, our understanding is that if you are maintaining a tax home through work (25% of yearly taxable income and making less at a PRN job, you are likely fine. We found out that if your income from the PRN job exceeds the income in the tax home area, you can now have a situation where the tax home switches to the PRN location. If you are considering PRN work and you maintain your tax home through returning to it for a minimum of 30 days per calendar year and not through income, this would be a specific situation I would consult with a tax professional.
“[Maintaining a tax home] is best done by [returning home] 30 days per calendar year OR maintaining through work which means at least 25% of yearly taxable income on a cyclical, annual basis”
This is best summed up by stating simply…if you are making a significant amount of money (fully taxed) in an economic area that is not your tax home, you could accidentally switch your tax home. We have had several concerns regarding this situation that were cleared up by TravelTax.
Easier to do it right than fix it
This applies to not only PRN work, but also taxes in general.
As fellow travelers, our best advice…make sure you understand your tax situation and what you are doing to maintain your tax home, and make sure you have someone who understands your specific tax home needs as well as the per diems you receive.