housing allowance?

[kakroll]

So I am wondering how this whole housing allowance thing works.

My understanding is that the IRS tax free amount depends on the location and that each region has its own $ amount, But is the reimbursement that the travel company gives the same as the amount listed on the government site-- GSA.gov?

For example if a particular region is rated at $85. tax free reimbursement, then does that mean the travel company will reimburse me $85. a day if I take an assignment there?

Also, do travel companies give a meals and incidentals allowance?

Thanks

[NedRN]

Agencies do offer M&IE or per diems along with housing. In fact tax recent rulings require them to do so if they provide housing (taxation to the agency is different for housing and M&IE). Sometimes agencies combine the two as a single cash stipend to the traveler without specifying the breakdown. If so, you may assume a 60/40 allocation to housing/M&IE.

No business is required pay any compensation to employees other than hours worked at minimum wage. Under certain conditions businesses may offer reimbursements for housing, M&IE, and mileage. Generally, as long as they are under the GSA maximum amounts, they are eligible for tax-free treatment (to the employee). The employee must be working out of town away from their legitimate tax home and the nature of the job requires overnight stays.

Why don't they just pay the maximum allowed? To answer that, you have to understand the basis of travel nursing. The hospital pays the agency an all inclusive bill rate. From that bill rate, you have to pay hourly wages, housing, M&IE, travel, and license reimbursement. If you pay more in one category, you must pay less in another. If an agency were to max out the reimbursements, pay could be below minimum hourly pay! Even if not, it is only prudent to pay something resembling fair wages. If an agency were to pay minimum wage for a nurse (one of the higher paid segments in America), the Tax Court may well consider that to be recharacterization of wages which is illegal and the consequences to the agency would not be pretty.

If you find an agency paying large reimbursements and low pay (recently heard of as low as $15 an hour) nothing bad will happen to you to accept it. Just be sure that you are maintaining all aspects of a tax home! Otherwise a personal tax audit could be life changing.

[kakroll]

Thanks! I appreciate the reply, it gives me a better understanding of how they base reimbursement. I knew they had a set amount that they cut into a pie, so to say, but wasn't sure if they maybe also got a break with the tax exempt reimbursement part.

[NedRN]

Yes, there are breaks and costs associated with "Tax Advantage" programs. I can detail those, but they don't really matter to travelers. Because of the extra taxes though, agencies have to pay less gross pay to itinerant travelers. That is the only point of interest.

The reason back office accounting doesn't matter to travelers is competition. Tax Advantage is effectively universal now for agencies (in-house hospital travel is a different story), so there is a level playing field. You might picture that an agency that pays lower expenses (of which taxes is one) has more to keep for themselves. But that is not the big picture. The reality is that if one agency pays more for travelers, they have a competitive edge over agencies who short sightedly decide to increase their gross profit margin. They will have more travelers which translates to greater net profit overall.

You can see this with small agencies versus large agencies. Small agencies have lower overhead and can usually pay more for travelers. They don't make more money per traveler. Large agencies have other competitive advantages besides pay so they can survive. If small agencies don't pay more, they cannot compete.

What keeps agencies "honest"? Travelers shopping around. That is why you need to sign up with multiple agencies. Different agencies have different competitive strategies, and some agencies do pay less than others, often by focusing on the ignorant new traveler, of which there is always a good supply. But generally, competition levels the playing field and a balance emerges between making a fair profit and attracting travelers with competitive pay. The rule is called supply and demand.

[kakroll]

Yes I understand supply and demand very well and have several companies I am going to work with. I always become a well educated/researched and prepared individual "before" I start my negotiating wether it be for employment or a purchase. I can be particular as I am not in any great need for employment, so demand is not a problem, and there is a great supply of companies. :-)

again - thank you for the info!