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

meandragonbrett · Jan 3, 2013

If you take an assignment within 2 hours or so drive from your tax home I would almost bet money that you might not qualify for the tax free per diems. You should definitely speak with an accountant.

The finances of traveling can be very confusing.

Yes, some agencies will pay $10-15/hour and then max out the subsidies and that's how they operate. Just remember that your overtime would be based on your $12/hr and not the hourly blended rate they will quote you.

BluntForceTrauma · Jan 3, 2013

Could also make a difference when trying to finance things....and if anything happens where you would have to be paid a portion of your hourly rate (unemployment, workmans comp, etc)

travelwise · Jan 3, 2013

Where are you looking to travel? I'd definitely say some agencies are better than others with pay and frequency of jobs depending on geography...

Truckee · Jan 8, 2013

The practice is fairly common and makes sense. The basis for this is: you pay less taxes, they pay less taxes. There are traps to this and there are things you can do about this.

The traps.

If you were to take a years salary at $12/hr to a finance company for a car, home, remodel, they would laugh at you.

If you file your income tax at $12/hr for a nursing job will you be more of a target for an audit; I don't think so, I also don't think it would be anything to worry about. You aren't hiding taxable income, and that's what they are looking for. Also, this is for 13 weeks, for that amount of time it's no big deal. If it were for a year at $12 I might be a little shy.

Things you can do about it.

If you go to "pantravelers.org" there is a calculator that will show you your hourly wage after all your benefits added in. You can play with the numbers such as more taxable and less of a stipend and ask the agency to adjust likewise. But this might be a tough sell to the agency on your part because they will be paying more taxes on your pay as well, that money has to come from somewhere (you).

Some people on this board will tell you to always take the lowest hourly and most in tax free, some will tell you to always do the opposite, your situation depends on what the future holds. I am getting $17/hr and my take home pay each week is pretty nice. Don't let that one $ number scare you, look at the big picture.

Lastly, look closely at the IRS's rules about travel. They say something to the effect of "a reasonable commute home". An 8 hour day with a 2 hour commute is looked at differently than a 12 hour day with a 2 hour commute. As with most IRS rules there is a "test" to see if your situation qualifies as a travel position, ask a professional.

MarcyRN · Jan 9, 2013

Thanks so much for alll the insight, seasoned travelers. I hadn't thought at all about that low hourly rate affecting things like overtime, workman's comp, etc. Overall, it's a lot to think about. I certainly don't want to be a target for an IRS audit. Grrrrr. Maybe travel nursing isn't as lucrative as I'd thought. Sigh. "If it seems too good to be true...it probably is..." comes to mind. I did some math, and, even at the $1300-$1400 a week per the typical 13 week contract, that's only $17,550 per contract. At four contracts a year (and how realistic is that, which would allow for NO time off between contracts?), that only comes to about 70K a year. Even with, say, a $1000 completion bonus at the end of each contract -- that's like 74K a year. I make more than that just doing per diem hours at my hospital. LOL. It's definitely not all about the money, but man, it seems kind of like a letdown.

Also, I'm hearing different things from different recruiters about IRS rules regarding what criteria must be met for someone to be eligible ofr the travel stipends. One agency said anything over 50 miles from your home is eligible, and another said there are "new IRS guidelines" that state you must be more than a 90 minute drive from your work site. It's frustrating and a bit scary. Not sure I even know who to believe/trust. Guess I have to find an accountant. Hmmm.

Anyway, thanks to everyone who took the time to answer. I know the same questions often get asked a lot on these boards...it just takes forever to scroll through the years of back posts to find the questions you're looking for.

Oh -- Travelwise...I'm looking to travel rather locally at least until the summer. I've got five classes left to finish my BSN and that's my priority right now. I live in southern NJ and would like to be within, say, four hours of home. I could do NJ, DE, MD, PA, NY...even CT and MA for the right spot. So east coast, Atlantic seaboard.

Thanks again, everyone!

MarcyRN · Jan 9, 2013

Oh, one more question. What about all the agencies that advertise $40 + an hour AND free, private housing? I always thought that in travel nursing, furnished housing was pretty much provided for you, in addition to, and exclusive of, your salary. Do such agencies even exist, or is this false advertising? Or is it a thing of the past?

NedRN · Jan 9, 2013

74K plus housing plus taxation on a lowered amount sounds a lot better than a staff position to me! Seriously though, you have to compare that to poor health insurance and no PTO, vacations, or holidays. It should really come down to lifestyle desired, do you want professional challenges and new locations, or do you need to maximize pay and benefits?

There have been a lot of agency audits lately, and agencies adopting internal rules such as a 90 mile limit to enable traveler eligibility for tax free reimbursements to keep the IRS off their backs. An individual subjected to such a rule could alway itemize legitimate expenses instead. For example, an assignment may require you to take call that demands a 30 minute response. Not possible if you live 40 minutes away (which could be on the other side of Houston). That would survive any audit.

But agencies need some general rules and stick to them to avoid audits themselves. Even if an agency says you can go back to an assignment and draw tax-free money after a 30 day time out (for example), that does not protect you personally from an IRS auditor that sees you've been working exclusively at one place for the last three years.

MarcyRN · Jan 9, 2013

Hi, Ned. Great points, but the 74K figure above would actually INCLUDE housing, which I have to find myself, as a stipend. So deduct from that my hotel or apartment rental costs and, depending where I am, could eat a LOT of that, plus I'm still paying mortgage/utilities, etc. on my home base house. Does that make sense? And in some places, the housing stipend sounds great, unless I actually have to pay for housing myself out of that. LOL. I've been talking to one recruiter about doing a summer contract in Delaware. There's a lot of need there because of the beaches and the influx of tourists who come each summer. The housing stipend she quoted me was $1008 for the week. Well..as someone who frequents the northeast Atlantic shore in the summer, I can tell you that in most towns, the most minimal of accommodations (not even on the beach) go for a minimum of a grand a week. I'm looking into hotels for the nights that I work, but even in the best case scenario, I'm looking at $150 a night. See why I'm confused? LOL.

I have wanderlust in my heart, so probably the solution for me is to not go to real touristy spots where lodgings are going to be higher, but when you compare the numbers in black and white...it's tough. I'm not in a staff position at my home-base hospital anymore. If I were, I'd be making about 63K a year with full bennies. I'm per diem now, though, and our rates are outstanding. Base rate (weekday day shift) is $42 an hour (which, of course, is all taxable). It's not all about the money, I know, but I do have to be realistic....it can't COST me money to live the life of a travel RN. If I'm actually having to use my housing stipend for lodgings, that $12 an hour rate quote sounds pretty darn terrifying!

I'm also spoiled rotten because I don't need benefits thanks to my husband's excellent coverage at work. But you're right. In the end, it does come down to desired lifestyles, seeing new locations and things vs. pay rates. I just don't want to be "had" or AUDITED! Thanks so much for all the food for thought!

BluntForceTrauma · Jan 10, 2013

Agencies that advertise greater than $40/hr are not a fraud or scam....I'm on assignment now with Fastaff making $45 an hour/48 hr guarantee...I am housed in the Candlewood suites which to me is better than a 1 BR apt..I don't have to pay for cable or wifi and am close to the hospital. I have a kitchenette and am able to cook...sometimes if extended stays aren't available or aren't decent enough near the hospitals, you will be housed in a regular hotel...but even with the $45/hr...if I wanted to find my own housing, my stipend would be $400 weekly with no change in my hourly rate.

dah doh, BSN, RN · Jan 10, 2013

My hubby did several years as a "travel nurse" for a local hospital a few years back. Free housing was included which was at a very high end brand new apartment building. However, since he lived locally, he took the housing stipend instead. This stipend IS taxable if you live too close to the travel assignment (check with the IRS for the actual distance to qualify). He put money aside each month for the taxes owed and he just paid by April 15. The housing stipend is negotiable too! After six months, the agency added a few hundred dollars per month every time he renewed his contract because my hubby complained about the low stipend and the hospital wanted him to stay on. He always gave himself a week or two off between contracts. Since the benefits were awful, he got his own health insurance but the agency reimbursed him for it. Actual pay was similar to full time hospital pay, but with the stipend included it equals more but the time off was without pay. Hours are usually guaranteed but floating is possible as well (read your contract carefully)! Pay and housing stipend vary with each agency and some hospitals only work with certain agencies so do your homework before committing. Good Luck!

NedRN · Jan 10, 2013

You won't find any distance mentioned by the IRS for commute. If you commute from home, you are not eligible for tax free anything. Period. Commutes in Western states for oil workers can be over 100 miles, it is only if you have to rest away from home that assignment housing, per diems, and travel become deductible or reimbursable tax-free.