Navigating pay rates, stipends, taxes, etc. Mind blown!

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Hello, travelers!

I am a new traveler. Actually, I spent last winter in Florida, but was hired directly by a hospital system at a flat hourly rate, which I thought was stellar, and had to find housing on my own. That was all fine and went off without a hitch.

I am now talking with multiple travel companies about doing some localish (within 2-3 hours drive of my home in Southern NJ) travel contracts this winter and I'm finding the numbers-crunching kind of mind-numbing. Several agencies are telling me that they pay their nurses a super low hourly rate on paper because it is taxable, but bulk the majority of the payout under Meal and Lodging Stipend to avoid it being taxed. The first agency to tell me this said that the hourly rate they pay nurses is TWELVE DOLLARS! :eek: Their daily rate x 7 days a week for housing stipend is $144 per day. That part of it comes out to about $1K a week. I mean, I guess it sort of makes sense, but I can't honestly see myself actually signing my name to a contract where I'm agreeing to being paid 12 bucks an hour! In your experiences, is it true that Meals and Lodging allowance is NOT taxable?

Is this the industry standard? Are the ads for "$45 an hour pay rate AND free, private, furnished housing!" a scam? I'm totally scratching my head over this and really, really want to avoid being scammed by an agency on my first assignment through an agency. Thanks so very much (in advance) for sharing your experiences! Peace!

Ned, I thought if it was greater than 50 miles...at least that's what they say! But it makes sense....it is only non-taxable if you commute and have to rest before returning home?

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Yes, the 50 miles is a common agency criteria. Not found in the IRS for expense reimbursement, but there is a 50 mile requirement for relocation expense deduction. A little confusing, but we are not relocating, and I believe the IRS only allows relocation deductions every 18 months. Small thing: it is not a commute if you have to sleep over. Don't use the word commute if you get audited!

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Specializes in Intensive Care.

Thanks for the reply, BFT! Could you clarify -- you're making $45 an hour/48 hour guarantee (NICE!) and you're housed in the Candlewood Suites (I think I would love that, too!)...does Fastaff pay for that, or do you? I have no issues staying in a hotel -- lots of perks to that, but I'm curious to know if those rates INCLUDE the hotel bill, too, as in the agency pays for it and you never see a bill. I really don't think I have a huge problem with paying taxes on my entire salary. I am having a problem, still, wrapping my mind around the $12 hourly rate I'm being offered by some agencies. Thanks again for the info. Perhaps a call to Fastaff is in order....;). Message me if I can help you out with a referral bonus or anything. Thanks again.

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Specializes in Intensive Care.

It's weird, because I've been told two different things by two recruiters within days of each other. Both claim their information comes from "IRS guidelines."

Recruiter A states that if your permanent residence is at least 50 miles from your workplace, you are eligible for tax-free housing stipends.

Recruiter B states that if your commute from permanent residence to your workplace is >/= 90 minutes of drive time, you are eligible for tax-free housing stipends.

It's hard knowing who to believe. I have a high school friend who is an accountant. I'm going to ask her if she'll research this for me.

Thanks for all the input, again, everyone. Definitely a lot to think about. BFT, have you been traveling a long time?

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I never see a hotel bill here! Agency pays for it all. This is my 3rd assignment with no issues...they usually give you a few choices of hotels/extended stays to choose from. I just look them up on the Internet and look at pictures and reviews before picking....and if you aren't happy there they will move you without complaint...As for the IRS rules, I would probably listen to Ned before I listen to a recruiter. He always offers great advice...your recruiter on the other hand is probably trying to make a little extra money for the agency!

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Specializes in Intensive Care.

You guys are awesome. BFT, I'm looking into Fastaff today! Ned, thanks for all the sage advice.

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This is confusing, but agencies develop their own "IRS guidelines". These are to keep the IRS off their back with a minimum amount of due diligence on the agencies part in approving a traveler's tax status. Sometimes these guidelines were actually approved by an IRS investigator for that specific agency. This allows them to offer tax free benefits without getting into trouble with the IRS.

This is a long way from laying an IRS blessing on a particular traveler's tax status that will hold up in an audit. It won't, and the agency's allowance of tax free benefits to you is not in any way official. It only protects the agency's practices from having to pay the IRS themselves on the back taxes, interest, and penalties that may be owed because you lied about your residence on the agency form.

Let me try a healthcare analogy on you. HIPAA is a federal law that requires among other things, protection of patient privacy. Nowhere in that law does it say how this should be achieved. It is up to individual healthcare facilities and providers to develop their own policies and adhere to them. JC and state accrediting agencies do not have guidelines either, they only check facilities to see that policies have been developed and the facility is following their own policy. To some extent, they will pass on the policies as being sufficient or not if poorly developed. So that protects the facility if their policy is decent and does a decent job from being dinged by the state or the Feds. But what happens if something falls through the cracks and a patient is damaged? That patient can still sue privately - HIPAA does not protect the facility although they did what the regulator required.

See where I'm going with this? It is a difficult concept. Agencies need to pay tax-free benefits in order to compete with one another. And they don't want big fines and back payments of taxes they failed to withhold. But they can't hire an investigator to prove one way or another about a particular traveler's tax status. So they develop rules that are binding inside their agency to prove to the IRS that they did try. Of course, it is easy to get around such rules since they don't investigate whether a traveler is telling the truth or not. Individual recruiters are also known to coach travelers on how to fill out the housing form: "Just use your parent's or grandparent's address if they are farther away than 50 miles".

The other side of the coin is that it has been very unlikely for individual travelers in the past to be audited just because they are travelers. So not much downside for most travelers, even if they have knowingly or unknowingly been not eligible to receive tax free benefits. The problem has mostly arisen if you are audited for some other reason there is a high probability of being caught with no tax home. The cost for that can be extreme. And since a large number of agencies have been audited this last year, the chances are good that some travelers will be swept up as well. So I can't advise just ignoring your potential tax liability.

You can always check the source when different recruiters tell you different things. I can't "prove" a negative - that the IRS has no mileage rules (but I can assure you that they don't). You can read IRS publications on the subject - the two most pertinent are Publication 463 and 535. Takes a while to learn the jargon and absorb it, but it can be done. I don't know of a recruiter that is an expert on these documents. Here is a quote from Publication 463 p. 3 on the matter of distance:

You are traveling away from home if:

* Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and

* You need to sleep or rest to meet the demands of your work while away from home.

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Specializes in Intensive Care.

Wow, Ned. Thanks. I get it, I really do....just still feels and seems kind of shady to me. I want a deal like Blunt Force Trauma has....a decent, competitive rate, AND a paid-for hotel to lay my head down between shifts. LOL. That's all. I'll pay the taxes on my $45 an hour. I WISH the IRS had rock-solid rules on this that applied across the board.

How do you know so darn much about all this stuff, anyway?!? Really, thanks for sharing so much information!

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I know because I'm snoopy (or curious)! I also became independent in 2004 (effectively starting my own agency) so I really need to know.

The IRS rules are solid, it is just the agency perspective versus the traveler/taxpayer perspective that doesn't align. Tax home status has so many variables that it would be impossible for any agency to really get it right every time. Hence the level of due diligence that they do do. And the advice to learn about it yourself or get yourself an expert like TravelTax.

I don't know about Fastaff's regular assignments, but for staffing strikes, hotel rooms are the norm and they are shared. They also specialized in rapid response assignments. Those pay more for good reason, for whatever reason, those are usually troubled hospitals. Sometimes they are post strike, sometimes they are inner city hospitals with a sketchy patient population and staff willing to work there, sometimes they have the state regulatory boards coming down on them heavy so they need to beef up unsafe staffing levels. Regardless, few hospitals pays those kind of rates unless they have to, otherwise they would just get regular agencies and rates. But Fastaff does pay well, and usually working 48 hour weeks (their norm) plus extra hours on top of that can get you over 200K a year if you can handle the hours. Personally, I travel to travel and you can't absorb much of the area working that hard.

For ordinary travel, you should aim for $35 hourly including per diems as good pay (plus housing on top of that). Or $50 as PanTravelers calculator figures it is excellent pay. If you are getting five bucks less, that is OK too. This is highly variable though based on location, specialty, and hospital needs.

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