Tax deductions for nurses: what a W-2 nurse can still claim and what a 1099 nurse keeps

Look at the form each payer sends before you collect a single receipt. A staff nurse is an employee of the hospital, clinic or agency, and gets a Form W-2. A contract nurse is paid as a business, and gets a Form 1099-NEC instead. Many nurses are both in one year, for example a staff job plus per-diem shifts through an agency.

The split matters because the two kinds of pay follow different rules. Here, an unreimbursed employee expense is a work cost your employer did not pay back, such as scrubs, a stethoscope or a renewal fee. A staff nurse lost them in 2018, when the code stopped allowing miscellaneous itemized deductions, and the 2025 law made that loss permanent (26 U.S.C. 67).

The IRS keeps a short list of employees who can still deduct their own work costs. It covers Armed Forces reservists, qualified performing artists, fee-basis officials and people with impairment-related work costs (IRS Publication 529). A staff nurse fits only if one of those applies, such as a nurse in the Army Reserve.

For tax years 2025 through 2028, you can deduct qualified overtime pay (IRS, new deductions for workers and seniors). It covers only the premium part required by section 7 of the Fair Labor Standards Act, such as the "half" in time-and-a-half (IRS FS-2026-13, overtime deduction FAQs). If your hospital pays double time for a holiday shift, only the half that the law requires still counts (IRS FS-2026-13, overtime deduction FAQs).

Hospitals add a twist. Some figure overtime under a special FLSA rule for health care instead of the usual 40-hour week, and then the premium the hospital actually pays under that rule is what counts (IRS FS-2026-13, overtime deduction FAQs). Your pay stub shows which method payroll uses.

The deduction stops at $12,500 for a single nurse, or $25,000 on a joint return, and phases down when modified AGI tops $150,000, or $300,000 jointly (IRS FS-2026-13, overtime deduction FAQs). You can take it whether you itemize or not (IRS, new deductions for workers and seniors). A married nurse must file jointly, and each spouse who earned the overtime needs an SSN valid for work (IRS FS-2026-13, overtime deduction FAQs).

Your W-2 now does the work. For tax years after 2025, only the amount your employer puts in box 12 of Form W-2 with code TT can be deducted (IRS FS-2026-13, overtime deduction FAQs). If an agency leaves it out, ask for a Form W-2c, because your own pay stubs cannot stand in for it (IRS FS-2026-13, overtime deduction FAQs). Your 2025 return escaped that rule under Notice 2025-69, so keep the last pay stub and any overtime statement the hospital posted (IRS FS-2026-13, overtime deduction FAQs).

One check before you count on it: a salaried nurse manager or educator may fall under the FLSA exemption for professional or executive staff. Overtime paid to an exempt employee does not qualify (IRS FS-2026-13, overtime deduction FAQs). Ask HR how your position is classified.

A nurse paid on Form 1099-NEC runs a small business, even with one client. You file Schedule C, and you owe self-employment tax once net earnings reach $400 (IRS Publication 334). In turn, your work costs become business expenses if they are ordinary and necessary in nursing (IRS Publication 334).

Keep proof for each cost on the day you pay it. That means the receipt for scrubs and shoes, the board invoice for each state license, and the course receipt for each certification. Malpractice insurance you buy for yourself belongs on the list too.

Car costs need a log. Driving from one patient home to the next, or between two facilities in a day, is deductible business travel (IRS Publication 334). Driving from home to the one hospital where you always work is commuting, and the IRS says it is personal (IRS Publication 334). Write the date, the start and end points and the miles for each trip.

Agency contracts belong in the file as well. They show whether the agency treats you as an employee or a contractor, and that sets the form you get. Long assignments far from home add tax home and stipend records, covered in the travel nurse checklist.

School costs help nurses on either form. The lifetime learning credit is worth up to $2,000 a return for 2025, and it can cover courses that build job skills (IRS Publication 970). The American opportunity credit is worth up to $2,500 per eligible student for 2025, for the early years of a degree (IRS Publication 970). Both credits need Form 1098-T from the school.

For example, an RN in an online BSN program gets Form 1098-T from the university and claims the credit on Form 8863. If your employer pays tuition through an educational assistance program, you can exclude up to $5,250 of it each year (IRS Publication 970). Keep the employer letter that shows the amount paid.

Student loan interest is a separate line. You can deduct up to $2,500 of it, reported to you on Form 1098-E (IRS Publication 970). For 2025 the deduction phases out between $85,000 and $100,000 of MAGI, or $170,000 to $200,000 on a joint return (IRS Publication 970).

Night and weekend shifts often mean paid child care. The care can qualify for the dependent care credit on Form 2441 when it lets you work. For each provider, you report a name, address and SSN or EIN, and Form W-10 is the usual way to ask for it (Form 2441 instructions).

Your W-2 also carries numbers your preparer needs. One box shows retirement plan deferrals and HSA contributions, and another shows dependent care benefits. If you used an HSA, the custodian sends Form 1099-SA for what you spent.

Some states still let a nurse deduct employee costs that the federal return bars. Rules differ by state, so keep the uniform and license receipts even as a W-2 nurse until your preparer confirms. The W-2 guide shows which boxes to check for each item.

• 26 U.S.C. 67: Subsection (h) denies miscellaneous itemized deductions for any tax year beginning after December 31, 2017; P.L. 119-21 sec. 70110 struck the 2026 end date.
• IRS Publication 529: Unreimbursed employee expenses are no longer deductible except for Armed Forces reservists, qualified performing artists, fee-basis officials and impairment-related work expenses.
• IRS FS-2026-13, overtime deduction FAQs: Only FLSA section 7 overtime qualifies, not overtime of exempt professional or executive employees; hospital alternative methods use the premium actually paid (Q17); $12,500 ($25,000 joint), phase-out above $150,000 ($300,000 joint); joint return and valid SSN; from 2026 only W-2 box 12 code TT, corrected by W-2c; Notice 2025-69 relief for 2025.
• IRS, new deductions for workers and seniors: The overtime deduction and the $6,000 deduction for people 65 and older apply for 2025 through 2028, for itemizers and non-itemizers; the senior deduction phases out above $75,000 of MAGI ($150,000 joint) and needs the SSN on the return and a joint return if married.
• IRS Publication 334: Business expenses must be ordinary and necessary; a return is required with $400 of self-employment earnings; travel between workplaces is deductible, commuting is not.
• IRS Publication 970: For 2025: lifetime learning credit up to $2,000 a return, American opportunity credit up to $2,500 per student, student loan interest up to $2,500 with a phase-out from $85,000 ($170,000 joint), and $5,250 of employer educational assistance excluded.
• Form 2441 instructions: Each care provider is reported with a name, address and SSN, ITIN or EIN, and Form W-10 shows due diligence in getting it.