High tax amount then write off housing at tax time.

  1. Hi,

    Does anyone ask for the highest taxable amount possible for an assignment which means you will not receive Housing & M&I? Then at tax time you write off your housing expense and M&I because you did not take any from the company.

    Maybe I should call my lawyer and ask.
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    About Wolf at the Door, BSN, RN

    Joined: Jan '12; Posts: 1,004; Likes: 687


  3. by   NedRN
    You don't need a lawyer, you need an accountant. In terms of bankable annual pay, it is almost impossible to do better by itemizing than accepting tax free stipends (assuming you have the required tax home). Here is why:

    The IRS requires receipts for actual costs when you itemize housing. When you accept a housing stipend, it is all yours. Most travelers spend less on housing than the stipend.

    There is also a meals and incidental stipend that goes along with housing. Similar story. If you itemize M&IE by using the max GSA amounts (the gross amount can be higher than the agency M&IE stipend), you must first fill out form 2106. If you look at that form, 50% must be subtracted before entering a line item on your 1040. That is always less than the agency provides.

    That should be convincing enough. But I haven't even mentioned filing thresholds which further reduces the effective amount of tax savings.

    Better to look for agencies that max out allowable stipends (google GSA per diem for IRS approved amounts) rather than itemizing those business expenses - even if you already itemize. You also have to look at total pay when comparing agencies to know which one is actually paying the best: it might not be the one with the highest stipends. There is a handy helpful calculator on PanTravelers for that.