Remote work stipends have a significant impact on employee retention, work satisfaction, and performance. So, it’s no surprise that employers provide this benefit to their staff, even though the state doesn’t mandate it.
Are remote work stipends taxable, though?
Remote work stipends come in the form of a lump sum and are generally taxable, while the reimbursement for supplies that the employee has incurred isn’t.
Keep in mind that the taxable amount varies per country, with some offering tax-free stipends.
Read on to find answers to some of the most commonly asked questions about taxable remote work stipends.
What Does A Remote Work Stipend Cover?
A remote work stipend or allowance is a fixed amount of money given to employees on top of their basic salary. The remote stipend typically covers the extra costs that come with working remotely.
However, its scope varies, with some employers providing a remote work stipend for self-care instead of practical aspects of the work-from-home setup.
Here are some of the general expenses an employer may provide for remote employees:
- High-speed internet
- Smartphone costs
- Lamps
- Home office equipment like laptops, extra monitors, and ergonomic chairs
- Tools specific to the job
Are All Remote Work Stipends Taxable?
In the United States, all cash stipends and expenses for home office supplies are subject to income and payroll taxes. Hence, an employee should include the stipend in his income taxes.
What Remote Work Stipends Are Not Taxable?
Reimbursement for the supplies an employee incurred isn’t taxable, provided that the expense is necessary, work-related, and documented.
Additionally, the cell phone stipend an employer provides is non-taxable, according to the IRS.
How Much Is A Typical Remote Work Stipend?
Remote work stipend varies per country and employer.
Some prefer to give a one-time stipend to help employees set up their home offices, whereas others opt for a monthly stipend to assist with offsite work-related costs, such as phone, electricity, and internet.
Depending on certain factors, an employee may get a monthly stipend of around $100–250 a month or a one-time stipend of $1000.
Examples Of Companies Offering Remote Work Stipend
Here are some of the companies that offer stipends to their remote workers:
#1. Hubspot
Hubspot, a hybrid-remote company, provides a $60 per month tax-free stipend to its remote workers.
#2. AdAction
AdAction offers a $1000 one-time stipend to all new hires, whether fully remote or not.
#3. Chegg
Chegg is an online textbook company that pays the monthly internet bill of its remote workers on top of the $500 one-time stipend.
#4. Facebook
Facebook provides a $1000 one-time stipend for remote expenses. Twitter and Google, too, offer the same amount.
#5. WebFlow
Webflow provides a $250 monthly stipend for remote work expenses and a $200 monthly health and wellness stipend for all employees.
Also, this company is generous enough to offer a $1000 yearly continuous learning stipend.
Conclusion
Remote work stipends are extra money given to employees to help in setting up the needed equipment for the home office.
Such allowances are subject to income and payroll taxes.
However, the reimbursement for the amount incurred in purchasing business-related equipment isn’t taxable.
