In this episode, we’re going to discuss travel nurse housing. This will be the first time we discuss housing on the podcast, so we’ll cover some of the basic things that you should know about travel nurse housing and then we’ll discuss some of the factors to consider when making the decision to take company provided housing or secure your own housing and take the company stipend.
Before we begin, it’s important to note that we will be discussing some tax related information in this episode. So, I have to provide the caveat that I am not a tax advisor and the information provided in this podcast is for informational purposes only. You would need to speak with a registered tax advisor, preferably one who has experience with travel healthcare professionals, in order to obtain advice for your unique circumstances.
Travel Nurse Housing Basics
Okay, with that in mind, let’s start with the basics about travel nurse housing.
- Technically, travel healthcare professionals are supposed to be traveling away from their home in order to work temporary assignments. As such, you need housing arrangements.
- Also, there’s a strong chance that you’ll be moving from location to location, so every move will require new housing accommodations.
- Of course, this can be a big deterrent for many people, so the travel healthcare industry got into the habit of offering company provided housing very early on. In most cases, I you don’t take company provided housing, you’ll receive money in kind which is intended to cover the cost of housing.
- Now, here’s where we get into the tax issues a bit. You see, housing is one of those benefits that is often offered “tax-free.” In order to qualify for tax-free reimbursements or benefits, you have to have a legitimate tax-home. Now, the discussion about a tax home is a subject for a future episode. For now, we’ll link to a series of articles on tax-home issues in the show notes if you’re interested.
- In any case, this is why the vast majority of agencies will have their travel nurses sign a “permanent tax residence form”. By signing this form, the traveler attests that they have a permanent tax-home and therefore qualify to receive the tax free benefits.
- Now, if you don’t have a permanent tax-home, then all the tax-free items become taxable. Housing is a little unique in this regard.
- If you take company provided housing, and the company knows that you don’t have a tax home, then they should technically be treating the housing as income that they’re paying to you by adding the value of the housing to your W2 so it can be taxed appropriately.
- If they don’t, then you should request that they do so. Otherwise, you’ll need to anticipate a large tax bill at the end of the year when you do your taxes assuming you follow the letter of the tax laws and declare the housing on your taxes.
- It’s similar for the housing stipend that they provide. If you don’t have a tax home, then they should be treating it as taxable income.
- Now, it’s important to note that when companies pay taxable income, they’re responsible to pay the employer portion of the payroll taxes. This constitutes an additional expense for the company so they may reduce the overall value of the compensation package to account for that expense. This is one reason that many companies won’t work with travelers unless they have a tax home.
Travel Nursing Company Provided Housing Basics
Okay, so with all that in mind, let’s move on to discuss the issues pertaining to company provided housing.
- As mentioned previously, most companies in the business will offer company provided housing. The first thing we need to remember is that the term “company provided housing” is ambiguous. In other words, different companies have different approaches to company housing.
- So to one company, company housing could be an extended stay or some cheapo hotel room, or worst of all, a totally dumpy apartment that’s great for them because it was cheap. To other companies, company housing could be a top-of-the-line apartment in the best area of town. And to other companies, company provided housing could mean anything the traveler wants it to mean. In this situation, the company will give the traveler options. More expensive options result in less pay and less expensive option result in greater pay.
- Because of these different approaches, there are a whole host of things for us to consider when dealing with company provided housing.
- First, some agencies use housing as a marketing gimmick when advertising their pay rates. Here’s what they do…they offer a seemingly great pay package, that includes company provided housing. But the company provided housing they’re offering is an Extended Stay or a very low end apartment. Then, when you call to discuss, maybe you ask how much the housing stipend is and they provide some relatively low number, like $1,000 to $1,500 per month. When you add everything up, the pay package no longer looks as awesome as it did originally.
- Of course, this same company may then tell you that they can get you better housing, but it will cut into the pay package.
- Why do they do this? Because so many travelers ask if pay quotes include company provided housing. As we’ve discussed before, this isn’t the best approach to evaluating the pay package. We should always be asking for the financial figures of what’s being offered. So always be sure to inquire about the value of the company provided housing. Again, the best way to do this is by asking for the value of the housing stipend.
- Now, there is a caveat to this that does confuse things a little, but it has to be pointed out. Over the years I’ve become convinced that some agencies are able to secure housing for less than others for one reason or another. For example, an agency that is staffing at a hospital in it’s home base or local market may have some great deals on housing by virtue of connections that they have in the local community. Or, the very large agencies may be able to negotiate discounts on housing with major apartment complexes and furnishing providers because these agencies are placing so many travelers with the apartment operator around the country. Or, some agencies are just better at working deals and negotiating than others. So with that in mind, it’s also a good idea to ask about the housing that they’re offering for the assignment. Try to get the name of the complex or view some images so that you can get an idea of what to expect. The bottom line is that this is one way that agencies can provide additional value compared to their competitors.
- The next thing to consider regarding company provided housing is the amenities that will be provided. Take furnishings for example. When we use the word “Furnished” to describe the housing, it could mean a number of different things. It may or may not include linens and towels, silverware, cleaning supplies, or a television. The apartment may or may not include a washer and dryer in the unit. So It’s important to find out exactly what the agency means when they the housing is furnished.
- Here again, if an agency doesn’t include an amenity that you want with their housing package, then you could ask them to include it. It could potentially be something that you negotiate for as an extra or the agency may lower the compensation package to cover the cost.
- Finally, you also need to inquire about utility payments for the housing. Different agencies handle utilities in different ways. Some agencies set everything up and pay for everything. Every last cost is included. Other agencies require the traveler to set the utilities up in their own name and then the agency provides a capped monthly stipend to cover the cost. For example, they might provide $150 per month to cover the cost of utilities. These agencies do this because they’ve probably had problems in the past where utility bills were run up so high that it really ate into their bottom line. So they believe that putting the utilities in the traveler’s name encourages them to be a little more frugal.
Advantages and Disadvantages of Taking Company Cousing
So with all of this in mind, let’s take a look at some of the advantages and disadvantages of taking company housing.
- One advantage is that there should be less hassle involved with taking company housing as opposed to finding your own. For all intents and purposes, you could just sit back and let them do all the work.
- As mentioned above, you could potentially benefit from the agency’s ability to negotiate great deals for great housing options.
- Another big advantage is that you have limited risk because the agency is the leasing party. So if anything goes wrong, like your assignment gets cancelled, then you’re not on the hook with the landlord.
- As far as the disadvantages go, you may lose some control over the selection process. Some agencies will send you a host of options, other agencies don’t really give you choices and instead put you wherever they want or are able.
- Finally, many travelers argue that taking company provided housing is less lucrative than taking stipend. And that’s what we’re going to talk about next.
Finding Your Own Travel Nurse Housing
If you don’t take the company’s housing, then you’ll need to secure your own. And one of the main reasons that travelers give for going that route is that is more lucrative. There are two reasons for this.
- For the first one, we need to wade back into the tax issues. As mentioned previously, as long as the traveler qualifies to receive the tax free money, the agency can provide the traveler with tax free reimbursements for lodging and meals and incidental expenditures while their working away from their tax home.
- There are several ways to do this, but the way that’s most commonly used in the travel healthcare industry is to use the federal government’s Per Diem Rates as the guideline. These are daily rates that companies can reimburse their employees who are working away from their tax home for lodging and Meals and Incidentals without requiring receipts.
- Now, why is this important? To explain that, I’m going to start by reading a quote from a tax advisor that was in the May 2011 healthcare traveler magazine newsletter. It goes like this: The standard practice for reimbursing travel expenses is a tedious time-consuming task of collecting receipts and submitting these documents to a staff member who cuts a reimbursement check to the employee. Over time, this creates mounds of paperwork and requires additional staff time to manage. The per diem method of reimbursement substitutes actual receipts with a standardized rate. At least annually, the federal government publishes a table of lodging and meal rates for every location in the world starting with a minimum amount and then specifying certain localities where the costs are higher. The per diem rules allow an employer to pay up to the amount of these published rates without the exchange of receipts, assuming that the employer has performed reasonable due diligence in screening the employee for a tax home and assuring that the individual has not worked in the same area more than 12 months. If the employee passes these tests the employer can pay a per diem rate to the employee as a reimbursement for lodging and meal expenses regardless of cost borne by the employee. If the employee’s expenses are less, nothing is reported. This may sound like a strange loophole, but the rationale is that the costs of keeping receipts far exceed the forfeited tax revenue.
- So to put that in simple terms, if the agency reimburses you more for housing than you actually spend on housing, then you do not need to declare the difference on your taxes which means that you save yourself the cost of paying taxes on that money.
- Now this is true as long as the agency pays you less than amount allowed by the federal government’s per diem table.
- Let’s look at an example to clarify. Let’s say the per diem rate for lodging in the city you’re going to take a travel assignment is $100 per day. That’s approximately $3000 per month. Now let’s say the agency offers to pay you a $2200 lodging stipend. Again, that’s less than the $3000 they’re allowed under the government’s per diem rates. Now let’s say you find housing for $1500 on your own. There’s a difference of $700 between what the agency is providing and what you’re paying. So you would avoid paying taxes on that $700, which could save you $100 to $200 per month depending on your tax bracket.
- Now, it’s important to point out that the government’s per diem rates are the MAXIMUM that are allowed. They are not required. So most of the time, you’re going to find that agencies pay less than the maximum and there are two reasons for that. First, agencies are constrained by the bill rate. Remember, the compensation package for every travel nursing job is based on the hourly rate that the agency is able to charge for the traveler’s time at the facility. So, in many locations, the maximum amount allowed by the government is too for the agency to be able to pay and still have money left over for the rest of the pay package. Second, the rates published by the government are daily rates. They don’t account for the cost savings that are realized by long term stays. So there is some concern on the part of agencies about giving out tax free money that the agency is fully aware will not be needed to secure adequate accommodations. This could potentially get them in hot water the IRS.
- Okay, now let’s take a look at the second way that securing your own housing can be financially beneficial. As mentioned above, different agencies provide different types of housing. Whatever, the situation, if you are able to find housing for less than the agency, then you are going to pocket the difference.
- You may be wondering how that would be possible. I mean, if you’re able to find cheaper housing why wouldn’t the agency be able to find cheaper housing? Well, some agencies aren’t that flexible with their housing options; they provide what they provide, no questions asked. Others may not be willing to sign off on housing situations that will work just for you. For example, you may find a room for rent in someone’s home that you’re really comfortable with, but a lot of agencies aren’t going to get into an agreement like that for one reason or another.
- At this point, we’ve pretty much covered the potential advantages of securing your own housing. Essentially, you get flexibility and you also get the opportunity to save money. However, there are also some disadvantages.
- First, if you sign any type of lease, you’re putting yourself at risk in case something happens like the contract gets cancelled, or you have to return home for some reason. Now, in many cases, landlords are willing to work with you on stuff like this, but some aren’t. So, just remember, it’s your name on the lease.
- Second, you could face some steep startup costs. Deposits, first and last month’s rent, cost of furnishing, all these things can add up quickly.
- Third, it could be time consuming…sometimes, your agency will assist you in finding something, and sometimes you’re on your own.
- Finally, your options may be limited. The really nice apartment complexes could be cost prohibitive to the point that you have to rule them out entirely.
Additional Considerations For Travel Nurse Housing
Now, there are 2 final things I want to say on this for now that pertain to considerations you should make when deciding whether to take company housing or get your own. First, if you want a posh, nice apartment in an apartment complex, then there is a good chance that you’re better off letting the agency secure that for you. Chances are that you won’t realize much of a financial gain and it just won’t be worth the hassle. Now, that’s not always the case. There are certainly circumstances where you can get a great deal.
Second, there are times when an agency may be willing to give you a higher stipend than if you don’t take their housing. For example, they might offer a stipend for $2700 a month or housing that costs $2000 a month. If you take the housing, then they add the $700 difference between the cost of the housing and the value of the stipend to your hourly rate. So there is a financial consideration. Now, for all intents and purposes, I don’t think it’s good for agencies to be doing this, because it probably constitutes a form of wage recharacterization. They’re not supposed to move money from stipends to hourly rates, but some do it nonetheless and you’ll just need to decide what the best option for you is in that circumstance.
Wow, we went through a lot of information there. We’ll have everything, including links to useful resources, posted in the show notes. I actually have someone transcribing this, so the shown notes will be very detailed. Again, when it comes to tax information, I am not a tax advisor so this recording is for informational purposes only. If you have any questions or concerns about this topic, or if we got something wrong, please let us know by posting in the comments on the show notes page. That URL is blog.bluepipes.com/episode13. We plan on covering some more stuff about travel nursing housing in future episodes as well. If you are enjoying this podcast, then we would greatly appreciate your support in the form of a rating in whichever platform you’re using to listen whether it be itunes or stitcher. It really does go along way toward helping us get the word out and get more listeners so we can keep the show going.
Thanks for listening and until next episode have a safe and prosperous travel healthcare adventure.
Travel Nursing Pay – Qualifying for Tax-Free Stipends and Tax Deductions: Part 1
Travel Nursing Pay – Qualifying for Tax-Free Stipends and Tax Deductions: Part 2: Maintaining Temporary Status
Travel Nursing Pay – Qualifying for Tax-Free Stipends: Part 3: The 3 Factor Threshold Test
Travel Nursing Pay – Qualifying for Tax-Free Stipends: Part 4: The 3 Factor Threshold Test
No Need To Declare Additional Tax Free Money – Article
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