Agencies giving more than GSA allowable amount

[Wolf at the Door, BSN]

I have seen a few contracts where the total stipend is more than total GSA allowable amount for that city. I asked the agency where they came up with these figures and they all of a sudden started to decrease the GSA amount not once but twice. I kept asking for the Housing and M&I breakdown and all I got was a total amount LOL. I am taking the high road. I do not want any tax trouble. What are your thoughts.

[NedRN]

I'd be OK with any amount an agency offered over the GSA guidelines. The liability here is primarily on the agency, not the worker. It is conceivable that the IRS could bill you for taxes on the overpayment, but they will only discover this by auditing the agency, and generally they would collect from the one deep pocket (the agency) for the proper withholding, rather than going after a hundred plus individual travelers.

The caveat of course is that you have a legitimate tax home and are working away from home temporarily on business that requires local lodging. Otherwise it will cost you large if you are audited.

[Wolf at the Door, BSN]

I spoke with my tax lawyer. She does not understand why they are doing it this way. They can write off the money in a different way. She advise me to take the money. However I will end up paying taxes on the extra amount at the end of the year. I am waiting on the agency to give me the exact breakdown of the stipend. If there is a bonus in there which is what I am thinking I just want to know. I also asked if I could just enroll the amount in my personal 401k to protect it from taxes. She said that is one way of doing that. My friend came up with that idea. I am just not use to a higher than GSA stipend.

[NedRN]

Wow, you have a tax lawyer? Offshore accounts and trust funds?

The stipend amounts are not reported to the IRS. Not sure why you believe you will have to pay extra taxes. It will only be if you report stipends (technically reimbursements) as income on your own free will.

You can certainly contribute the money to a Roth IRA/401. That is always your option with post tax money. It would be rather odd to put it a traditional IRA or 401 and declare it as income. Then you will ultimately have to pay taxes on the contribution.

[Wolf at the Door, BSN]

Yes, through pre paid legal. No mafia connections so I am without an offshore account. trust funds I can only dream of.

My lawyer advise me to pay taxes on tax free money that was over the allotment for that area incase of being audited.

I ended up not taking the contract because I could not get my requested time off. The manager at CRMC in Fresno would not talk to me after I called his cellphone twice left voice message once and I visited in person. He was in a meeting but, I heard he was on the phone with one of his clinical floor supervisor who told him to call me. I stopped by to introduce myself since he never phone interviewed me, I still received no call. I was not worth 2 minutes now, I was not going to be worth a damn if something went down on the unit. Good Riddance.