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Sat 5 Jan, 2008 01:27 am
Tax advantage plan or higher rate and stipend
I had a long talk today with a recruiter about tax advantage VS rate and stipend. I was led to see that getting paid $35 an hour and getting taxed only on $10 of that, then paying my own expenses of which they will locate and provide resources, is better than getting $35 an hour and letting them pay for housing, one point I agree with is that at the end of the year total taxable income is $20,000 or less, instead of $60.000 or more, and so tax rate is also less at that time, also most expenses still are written off and with IRA or 401 K, tax liability is very low!
Anyone else had this conversation about compensation and what do you think, the weekly pay works out to be about the same, even when figuring what is being paid tax free stipend for the housing.
It seems to make sense, but I am interested in other's opinions.
I am trying to get set up to start traveling in March, and have been doing research on this stuff for over a year. It's complicated!
Thanks for any feedback.
T
Re: Tax advantage
I traveled for a company where I was given higher wages and had to provide my own housing, etc...with resources of course. It was nothing but a huge headache. I had to call ahead and commit to housing without ever looking at it. I had to furnish the place myself which was a fiasco, even with a rental company down the street. There were utilities to have turned on, deposits to pay, no matter what your credit and alot of other hassles and headaches. Consider all this when making your final decision. To me, it is worth alot more to me to have all these issues handled by someone OTHER than me.
Stipend & tax advantage plan
Some companies will use it and some will not. They will all explain why they do it a particular way, but the recruiters work for the company and look out for the company interests. Get a tax advisor that deals with travel professionals and tax advantage plans. There is a website for the dot gov website for the GSA that specifically indicates the rates for traveling that covers housing, meal & incidentals and travel. Big cities, of course, have higher rates. If your stipend goes up, the company will decreases your hourly rate. Sounds good, but if you take that to an extreme it will affect what you look like to a mortgage company when you try to buy a house or decrease the amount you get for disability/social security from the gov't. That's assuming you believe there's gonna be anything left and you're even gonna be able to afford to retire.
If you don't have a person that is familiar with doing taxes for travelers, get one. If you feel uncomfortable about how pay is structured for a particular contract, run it by him/her and get their opinion since they deal with the IRS constantly and are working on your behalf, not the travel company.
As for you vs the company setting up your housing...it's your call. I've heard a few horror stories about people getting placed in some real flea bags and just as many placed in some really nice places. If you go online and visit any one of a number of rental websites you should be able to find something to your liking, usually images of the place, map location for proximity to your facility, short term lease possibilities. Craigslist.com is usually a good starting point and can lead you to other different resources. Ultimately, you can always ask the manager/supervisor during the phone interview if there are any recommendations, especially where not go as far as neighborhoods. It's a bit of leg work on your part, but if you don't mind you might be happy with the place and the cost.
For those of you who even remember Fight Back! with David Horowitz (it was a show about protecting consumers) Stay aware and informed and don't let anyone rip you off!
the biggest reason why companies push the "tax Plan" is this if they can get your hourly rate down low enough if you ever work overtime for a hospital it reaps the company great benefits. for example if you work for a contract for 40 bucks an hour (say 24 untax 16 tax) when you hit 40 hours you only make 16 and overtime would be 24 an hour. the company still gets a bigger bill rate for the overtime.so the company then nets more money for them. this help
TeleNurseboy wrote:the biggest reason why companies push the "tax Plan" is this if they can get your hourly rate down low enough if you ever work overtime for a hospital it reaps the company great benefits. for example if you work for a contract for 40 bucks an hour (say 24 untax 16 tax) when you hit 40 hours you only make 16 and overtime would be 24 an hour. the company still gets a bigger bill rate for the overtime.so the company then nets more money for them. this help
hey all
new to the board
that is a really good point
i have also heard that they push the "tax plan"
because the company is not taxed on that money by the fed. gov.
they are taxed on the hourly rate only
this is what i have heard so take it with a grain of salt
less money they pay in taxes the better also
jtf77 wrote:TeleNurseboy wrote:the biggest reason why companies push the "tax Plan" is this if they can get your hourly rate down low enough if you ever work overtime for a hospital it reaps the company great benefits. for example if you work for a contract for 40 bucks an hour (say 24 untax 16 tax) when you hit 40 hours you only make 16 and overtime would be 24 an hour. the company still gets a bigger bill rate for the overtime.so the company then nets more money for them. this help
hey all
new to the board
that is a really good point
i have also heard that they push the "tax plan"
because the company is not taxed on that money by the fed. gov.
they are taxed on the hourly rate only
this is what i have heard so take it with a grain of salt
less money they pay in taxes the better also
yes it is true, the company only pays taxes on the hourly rate.