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Employment Stipends

Employer-paid benefits can amount to one-third of your annual income, so it's important for you to understand and review them carefully and treat them as valuable financial considerations.

The cost of working can be expensive. Gas prices are high, public transportation is not always reliable or available, child care can cost more than you make and all the other employment expenses add up quickly. Your employer may have programs in place to help offset some of these costs.

What is a stipend?

By definition, a stipend is a fixed sum of money, paid periodically for services, to defray expenses. In other words, a stipend is an allowance your employer may provide you to offset some of the costs associated with working. Most employment stipends are taxable. Your employer will report them to the Internal Revenue Service, and you will have to claim them on your tax returns.

Common Stipends

Mileage reimbursement. A mileage stipend is a reimbursement made to an employee to attend work-sponsored activities. For example, if you typically work virtually and your employer needs you to come to the office for a meeting, you may be eligible for compensation for the miles you were required to drive. The IRS sets optional annual standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. You can find current rates by visiting IRS Credits and Deductions.

Telephone. Your employer may give you a company-issued mobile phone or may request that you use your personal phone for business purposes. In either case, your employer may consider this a business deduction and cover the costs or partial costs for your personal phone.

Internet. Similar to telephone expenses, many companies require employees to use internet services outside of the office for business purposes. Taxable internet stipend programs can help you offset internet costs if your duties and responsibilities require internet access for your job.

Child care. Some employers offer a form of child care stipend. These stipends typically do not cover the daily costs of child care but help offset the cost while you take part in special activities for the company or organization. Employers may provide a child care stipend when they request that you work outside normal business hours, require you to take a professional development course or travel for business purposes.

Qualifying for a stipend

Your employee handbook should indicate whether your company or organization offers any stipends. If you do not find any information on stipends in your employee handbook or are not sure if you meet the qualifications for a stipend, check with your supervisor or human resources department. If your company does not offer stipend programs and you want to talk to your supervisor about the benefits of stipends, here are a few pointers.

  • Suggest set amounts. Suggest set stipend amounts, instead of monthly reimbursement programs, to make it easier for your employer to budget monthly business expenses.
  • Sell the financial benefit. Not all stipends are taxable. Your employer may be offering a taxed benefit when they could be offering a non-taxable stipend.
  • Promote employee morale. Employees' perspectives of their employer may increase, and they may gain a level of satisfaction and morale through stipends.
  • Suggest administrative benefits. Stipends are easier to change than an entire benefits package.

If you need additional information related to stipends, you can visit the Benefits and Financial Planning and Budgeting sections of the Employment Readiness lifecycle stage of MySECO or speak with a career coach at 800-342-9647.

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