take stipend, cheap hotel?

[dominiquejade]

In most cases, is it more financially beneficial for someone who isn't picky about housing to take the stipend offered and stay in a cheap hotel? In terms of being able to pocket the remainder of the stipend? Also, does the traveler need to own a home to be eligible for stipend, or is that only for other tax free benefits?

[NedRN]

You need to have a tax home, which has several requirements. Essentially it needs to be your home and you pay rent or a mortgage (or property taxes), and one that you can return to at any time (so you cannot rent it out but a roommate is allowed). The IRS says you must return "frequently" to this home. Working at home strengthens your tax home status (which is just a preponderance of evidence) but is not required. You also have to be working away from home temporarily to be allowed to take tax free stipends (or alternatively to deduct expenses on your tax return) - a travel assignment with a contracted end date meets that requirement. You can read more about tax home requirements on PanTravelers and TravelTax.

Hotels are much more expensive than a short term lease and unpleasant to live in generally. You might be thinking about extended stay hotels which are really apartment - also generally more expensive than a real apartment of similar quality. Some travelers like them but I can never justify it when I look at using one.

Yes, you can pocket any unspent stipend without having to declare it as income and pay taxes - assuming you have a tax home of course. The best way to maximize this is with low cost housing, and the lowest cost is roommate situations. I often do that, but it also is not for everyone. Easy to find on Craigslist as is housing in general. Even better is to post your own housing needed ad on Craigslist for either a roommate situation or private apartment (I've gotten great deals on private houses too) - travelers are desirable short term tenants - everyone knows they can afford the housing.

[I<3Endo]

Ned....if I have a solid tax home (everything you said: mortgage, taxes, no renters, job @ home) do I need to save receipts for anything while I travel? If I'm taking the stipend?

Referring to receipts for my accountant.....not for travel or license reimbursement from my agency, etc.

Thanks!

Amy :)

[NedRN]

TravelTax recommends to keeping proof of assignment housing. He cites truck drivers not being eligible for tax free housing stipends if they sleep in their truck. One of the theories here is you have to have duplicated expenses to have a legitimate basis for tax free reimbursement. Your accountant doesn't need receipts, but you will need some proof if you get audited (a rental agreement might work, but I'm not a tax professional). In fact, it could be dangerous to give your accountant such receipts as he may use them as a deduction from your taxes, thereby double dipping, both getting a deduction and a reimbursement for the same expense - very illegal.

I would recommend you do not use a plane jane variety tax preparer, the travel industry needs special treatment. Use a specialty preparer like TravelTax - you would not want a medsurg nurse recovering your dad from open heart surgery, right? If you want a choice, PanTravelers has a page of useful sites for travelers that lists half a dozen travel nurse tax preparers who know the right way to do things. You don't need a preparer who lives close to you. You are dealing with multi-state taxation.

My mom has an accounting degree and specialized in preparing the tax returns for college and university professors. She routinely went back years for new clients and revised their tax returns done by others who didn't know about the special tax issues with that profession.

[I<3Endo]

Got it! :)

[dominiquejade]

Okay, so basically the difference in taking the stipend is if you leave housing in the hands of your agency, no matter what the price, you pocket nothing from that, but if you elect to take the stipend and deal with the headache of setting up your own housing, you can potentially pocket some extra IF you can find something cheaper.

I guess whenever I think of a 'tax home' i'm thinking mortgage..so if a traveler ends their lease at their apartment and doesnt own any real estate or property, are they even eligible for free housing at all?

[NedRN]

If you don't meet the criteria to have a legitimate tax home, all of your compensation is taxable. Was that your question? I'd suggest doing some reading if not. If after that your situation still doesn't seem to fit, the a professional consult is in order.

Yes, if you don't have a home to be working away from, you are itinerant (footloose and fancy free) and you are home wherever you are.

[dominiquejade]

I guess the problem is that i DO have a home where utilities are in my name and all of my "stuff" is, but i live in an apartment; the whole building is owned by family members, so I don't actually pay rent. This sounds like gray area to me, I'll definitely have to do some reading; i've also heard that an RV can be a tax home, so i'll have to look into that as well. Thanks!

[NedRN]

In my opinion, you do have a tax home. Mind you, I won't be there at your audit!

An RV that is your sole habitat can never be your tax home. You would have to park it permanently on a pad and, again, travel away from your home to be eligible for "free" housing away from home.

[Argo]

As long as you can cough up a lease and utility bill for an audit you have a tax home in the apartment

[caliotter3]

Have lived in expensive extended stay hotels, single occupancy hotels, and rented rooms in private homes. I would suggest renting a room in a private home as being the most desirable option for someone who wants to save money while being able to choose a reasonably safe and pleasant living environment.

[dominiquejade]

Ah, of all options, i actually think this would be my least favorite. My time away from work is usually MUCH needed down time, and I don't think I would want to be living in a home with other people.