happy thanxgiving everyone, i need your help again!!!
i have just signed up a contract where i'll receive $1200 for housing and $ 500 for medical insurance. i thought the money was going to be tax free !!!
when i received the paperwork from my company i read that i can have that money tax free only if i rent or i pay a mortgage in the state where i am traveling from. does anybody manage to get around this issue? how do you guys make sure that your stipend stays tax free?? thanks again everybody for your help. nico
I would like to know the answer to this question as well.
Probably not the answer your were looking for, but how about taking advantage of the poor housing market and purchase the least expensive place you can find ? Use it as a storage unit and a place to stay in between contracts, a legal way to take advantage of tax free housing stipends & per diems, reduce your income taxes, and have a good investment for your future. If you plan to travel for a while, consider buying your place in a nursing compact state so you won't have to deal with getting a new license for every contract.
There is not a way to "get around this" unless you plan on committing tax fraud. You are only eligible for tax-free housing if you will be maintaining a "tax home" in your home state, which means that you will be paying a mortgage or rent in your home state. Some travelers will attempt to get around this by saying they are "paying rent" at a family member's house, but in order for this to be legal, you would have to have a lease with this family member, ACTUALLY PAY THEM RENT, and then they would have to claim this rent as income on their tax return & pay taxes on it. Anything else would be tax fraud and could land you in serious trouble with the IRS.
My situation is a little different. I am selling my house prior to moving to Austin, TX. I plan on taking a few travel RN positions there to see where I want to eventually work and to make sure I like living there! However, I plan on living with a friend once my house is sold and pay her rent. Once I leave for the travel assignment, I am going to pay her rent to store my stuff that I will not be taking to Austin initially. Is there a set amount of $$ that I have to pay her in rent to store my stuff and to qualify for tax free housing? I certainly don't plan on comitting tax fraud :eek:
Also, if I don't qualify for tax free housing, then how much is taxed and removed from my paycheck?
If your housing is taxed, it is taxed at the same rate as your regular income would be. For example, if my company spends $200/week on housing for me, that $200 is added into my gross income for the week and taxed at the same rate.
As far as the "minimum" rent you would have to pay your friend, it would be whatever the going rate for rent for a 1 bedroom apartment would be in your area. Your friend would then have to claim this as income on her tax return, & pay income taxes on it.
ansellcr -
I think you would be ok. Basically if audited you need to be able to demonstrate that you actually live in area and it is your home; since you've owned a place there and you're going to be paying rent it's pretty clear that Austin is your home. The IRS might also look for proof like local bank accounts, driver's license, car registration, etc. Keep a copy of your rental agreements, rent receipts, bank statement, etc, just in case. The travel company will probably just ask you to just sign a statement that you are eligible for tax free stipends and per diem.
