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Your employment classification — W-2 employee or 1099 independent contractor — fundamentally changes how your taxes work. Most travel nurses are W-2, but some agencies use 1099 arrangements. TaxHomeBase handles both.

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Side-by-Side Comparison

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How Deductions Work

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Federal Deductions

The Tax Cuts and Jobs Act (TCJA) of 2017 suspended the ability for W-2 employees to deduct unreimbursed business expenses on their federal return. The One Big Beautiful Bill Act (2025) made this suspension permanent. W-2 employees are limited to the standard deduction on their federal return.TaxHomeBase still tracks your expenses because:
  • 5 states allow them — NY, CA, AL, HI, and AR didn’t conform to TCJA and still allow W-2 expense deductions on state returns
  • Profitability tracking — Expenses are factored into per-assignment net profit

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State-Level Deductions

If you work in a non-conforming state, TaxHomeBase automatically calculates your state deduction:Non-resident apportionment applies: the deduction is proportional to your income earned in that state.

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Self-Employment Tax (1099 Only)

1099 contractors pay self-employment tax (the combined employer + employee portions of Social Security and Medicare): The tax is calculated on 92.35% of net self-employment income (the 7.65% adjustment mirrors the employer’s FICA contribution).

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Filing Status

Your filing status affects your standard deduction amount: Set your filing status in Profile → Personal Info.

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TCJA Suspension (Permanent)

The One Big Beautiful Bill Act, signed July 4, 2025, made the TCJA suspension of W-2 expense deductions permanent. W-2 employees cannot deduct unreimbursed business expenses on their federal return. The standard deduction is applied automatically. However, 5 states (NY, CA, AL, HI, AR) still allow these deductions on state returns — TaxHomeBase tracks and applies these state-level savings automatically.