Tax advantage?

[johnson0424]

I was talking w/ a company and they said essentially if my hourly rate goes up my stipend(housing etc) will go down if my hourly rate goes down my stipend(tax free) will go up. I do have a permanent tax residence in MD and i was traveling to AL. the range of hourly wages went from $20-27.50 and the diference in lowering your hourly rate would be about 300 dollars more each mo? how can travel co's do this? i dont understand...

[deie0383]

Check out the thread "Contract Tips" there is alot on information regarding this in there. Also check out the web site www.gsa.gov it lists how much tax free money you are allowed depending on what area you will be working in and as long as you don't go over that amount you can't be taxed on it.

[latah514]

Be very careful when a travel company tells you this is an "advantage". It truth is you can take the same amount off your taxes at the end of the year and not get paid less per hour. Example: get paid 18.75 for the first 8 hours worked, and 25.00 for the next 4 hours. That averages out to 20.83 per hour. Then they say they are going to give you 39.00 per day per diem. YOU GET THAT MONEY ANYWAY!! You can deduct it off your taxes at the end of the year. So why take it now and let the companies give you a lower hourly rate and tell you they are doing you a favor? One company even told me that you can take the 39.00 per day now and still deduct it at the end of the year. NO YOU CAN'T. Check with a tax expert. I have talked to two and both said this is a way for the travel companies to pay less per hour and pay less payroll tax. It should be the "NOT A TAX ADVANTAGE PROGRAM".