Tax Free Help

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Specializes in ER.

Hi,

I am in the process of accepting my first contract and could use some help understanding what "tax free money" really is. The position is an ER position in New Jersey in Bergen county. I was orginally quoted at $33 per hour. However, when I recieved my contract they have it listed as $23 per hour (taxed) with $410 per week given tax free. Which they are telling me that I will take home more this way than I would if I was paid at 33 per hour?

My understanding is that the $410 is my stipend for food/expenses/ect. (When I look on the IRS per-diem site they have $427, so it's close.) However, for lodging which they are providing the IRS per-diem is $116 per day which breaks down to $3480 per month. The place that they are offering is a extended stay-hotel with an average monthly cost of $1200 less than the IRS per-diem.

I am not familiar with the tax-advantage/tax free program at all and want to make sure that I am not being swindled. I have sent my recruiter a request for my housing stipend allowance. I feel like I should be either being paid more or have better housing?

Any help/advice is greatly appreciated!

Thank you!

Lexie

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Specializes in Paramedic,ER, House Supervisor, OR, CVOR.
Hi,

I am in the process of accepting my first contract and could use some help understanding what "tax free money" really is. The position is an ER position in New Jersey in Bergen county. I was originally quoted at $33 per hour. However, when I received my contract they have it listed as $23 per hour (taxed) with $410 per week given tax free. Which they are telling me that I will take home more this way than I would if I was paid at 33 per hour?

My understanding is that the $410 is my stipend for food/expenses/ect. (When I look on the IRS per-diem site they have $427, so it's close.) However, for lodging which they are providing the IRS per-diem is $116 per day which breaks down to $3480 per month. The place that they are offering is a extended stay-hotel with an average monthly cost of $1200 less than the IRS per-diem.

I am not familiar with the tax-advantage/tax free program at all and want to make sure that I am not being swindled. I have sent my recruiter a request for my housing stipend allowance. I feel like I should be either being paid more or have better housing?

Any help/advice is greatly appreciated!

Thank you!

Lexie

Contact a tax professional to be sure you qualify as a person who is able to have the "tax free" payments. You may be better off taking your salary as taxable income, especially if you plan to work any overtime or extra hours. The rules for such are not black and white but rather grey and interpreted differently by multiple persons.

Rod

there are other posts in this forum regarding the same.

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Lexie

Completely agree with Rod. I was in the same position 3 years ago, got all kinds of advice from coworkers and fellow travellers. Then I called a tax company in California that specializes in this area. They wouldn't provide specific advise unless I paid them a "retainer" which kind of irritated me.... but they were highly recommended so I went with it. Long story short, I didn't qualify for the tax free income and was likely facing major penalties for taking the income "tax-free". There are specific rules you have to follow in order to get the benefits properly and unfortunately the agencies (and particularly the reps) suggest things that aren't accurate. It's like getting your taxes done at a car dealership. SERIOUSLY???? Anyway, I made some changes and today I've had 7 assignments, 6 that qualify, and I've really benefited because I took the money I would have spent on taxes and put it in a retirement account (they didn't charge me for that advice... but as you can imagine it has worked out really well!). Good luck. - Emily

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The IRS website lists the MAX rates for recieving non-taxed $$. That means the company cannot pay your more than what is listed for the area you are going.

If you divide that weekly perdiem by 40hours it comes to--$10.25. If you add that to $23, obviously that adds to $33.10. You will only be taxed on $23/hr that is why you will take home more than $33hr.

The above posters are correct. Make sure you qualify and also know that you are making $23/hr in the eyes of the Gov't.

If you consider your housing as part of your pay rate you would be looking at $40.60/hr. If you are wondering if that is a decent wage maybe research what permanent RNs in the area are making.

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Specializes in Emergency Medicine.

There is no such thing as "tax-free money".

They use that term loosely all the time but the reality is that it's an illusion.

It does NOT exist!

You draw wages based on the hours you work and companies have the flexibility to pay you additional compensation for expenses while "traveling" away from your permanent home of residence. They call it: Per Diem, flex-pay, or stipend... call it what you want to but it's a non-wage benefit employers can give you as a travel benefit. BUT- You MUST account for every dollar spent on expenses. ANY surplus dollars from what is paid and what is used is taxable. The good thing is that EVERYTHING you do 50 miles away from home IS tax deductible.

(Meals, beer/wine, gas, toothpaste, toilet paper, tune-ups, cell phone, everything)

What many companies do is just fail to report your stipend and then the government doesn't know about it, right? What the government doesn't know about then becomes "tax-free money". The problem is that YOU are then the one responsible. If they audit you you will not be able to use the excuse "I didn't know". They will just burn you with penalties and back taxes. You can certainly roll the dice... maybe they'll find out, maybe they won't.

http://www.wisegeek.com/what-is-a-1099-form.htm

Your company should be issuing a 10-99 as supplement to your W-2 at the end of the year. Then it's a simple matter of calculating actual expenses vs. the money paid out as per diem. Positive dollars are claimed as income. Negative dollars are a further deduction on your earned income. Gotta keep your receipts!

For me, I own a home in Georgia. I travel away from home and would rather be paid in full with respect to actual wages rather than given a per diem as a benefit. I can deduct more off my earned income. If I were just a traveler with no ties then accepting a per diem makes more sense because you don't have hard assets to itemize as deductions. The scenarios are similar but different. One taxes you in the front-end, the other in the back-end.

The right answer is to talk to a tax preparer in your state to do the accounting. They know your state laws as well as federal. They will keep you out of trouble and will only cost you 50.00 or so if you do all the bookkeeping. More if you dump all your recipts on them. Either way just do it...

I might be forgetting some points (it's late) but you should get the idea.

Let no one tell you there is tax-free money...

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Specializes in ER.

hello everyone,

all this tax stuff, tax advantage program stuff is confusing. i am a travel nurse who lives in a rv and has a home base. can anyone out there recommend a very good travel nurse tax person/accountant? it really doesn’t matter what state they are in. i just need someone who can explain it all in easy lingo and do my taxes.

thanks

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Specializes in Paramedic,ER, House Supervisor, OR, CVOR.

I am currently using Travel Tax. Google them, they will do a telephone conference call explaining most of what you are wanting to know. Good luck with the easy tax lingo.

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