Working from home has been great for most people, but there’s one small problem – not everyone has a home office. Some people have made do with whatever they have to hand. Others have generous employers who help pay for one through stipends and expenses. There are plenty of uses for remote work stipends and expenses. The big question is, “are remote work stipends and expenses taxable?”
What are Stipends and Expenses?
A stipend is effectively a sum of money paid to someone, typically a learner or intern, to help with living expenses. Most unpaid interns get a stipend in lieu of a salary. The size of the stipend depends on the employer. For example, your boss might give you a check for $1,000 to create a home office so you can perform your best.
An expense is a small amount of money paid to cover employee expenses at work. For example, if you have to work remotely and can’t access the company cafeteria, your employer might reimburse you the cost of eating elsewhere. This is an expense.
Are Stipends and Expenses Taxable?
This depends. As stipends and expenses aren’t the same as wages, employers don’t withhold Medicare and Social Security from them. Even so, stipends might be classed as taxable income depending on where you live. In that case, you should plan to set aside some of the money to cover taxes.
If your employer is offering stipends or you are considering taking on a job that has them as perks, it’s worth talking to the employer and asking if they are taxable. If they don’t know, then talk to a tax professional.