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I'm hoping for a second opinion because this is the first year that I will be filing a Form 1040 with my new travel job. I am a traveling occupational therapist with an income of $70,000 per year. Of that, around $25,000 is taxable wages per year. The remaining $45,000 is a non-taxable living expense stipend that I receive because I am traveling away from my tax home. This is standard practice in my role.

My W2 only lists the $25,000 which I assume is what I put into Line 7 (Wages, salaries, tips, etc) on my IRS Form 1040.

However, am I right in thinking that I'll list the non-taxable $45,000 on Form 1040 under both:

  • Line 21 (Other income), and
  • Line 40 (Itemized deductions from Schedule A).

If so, I also presume that I then fill in:

  • Form 1040 (Schedule A), and
  • Form 2106 (Employee Business Expenses)

I think I've understood the process but just wanted to get a second opinion as to if I had wholly misunderstood :) Am I wrong and only need to list the $45,000 in one place on Form 1040?

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    Why do you think that the $45,000 is taxable? Check out "Per diem or other fixed allowance." on page 15 of Pub 15 to see if you're under the limit specified. If you're under the limit, then it seems like it is not taxable. To the extent that you're over the limit, it really should have been reported on your W-2 (as I understand your situation). irs.gov/pub/irs-pdf/p15.pdf
    – user32479
    Commented Feb 28, 2016 at 20:36
  • Thanks for your reply! To clarify, I do not think the $45,000 is taxable. Because of being away from my tax home, I believe the stipend to be non-taxable but I still think (and want) for it to be accounted for on my 1040 despite it being wholly under the maximum limit. My apologies as I did not include a statement to that effect in my original question so I have clarified that in the question.
    – SimonsSchus
    Commented Feb 28, 2016 at 20:50
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    I would say you really need professional tax advice.
    – Zach Lipton
    Commented Feb 28, 2016 at 21:22
  • I agree - it is currently 9.30pm on a Sunday in the UK where I currently am so no direct access to a tax professional. I was just trying to get my head around if I was approaching it all wrong first, and we will likely get advice when back.
    – SimonsSchus
    Commented Feb 28, 2016 at 21:40

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If you're correct that it's not taxable because it's non-taxable reimbursement (which is supported by your W-2), then it should not go on your 1040 at all. If it is taxable, then it really should have appeared on your W-2 and would probably end up on Line 7 of your Form 1040.

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  • Oh no! An immigration requirement requires that I earn above $25,000 and that this is partially documented through my tax return. The non-taxable $45,000 is really going to be problematic if I can't account for it in some way that'll show up on the tax return. :/
    – SimonsSchus
    Commented Feb 28, 2016 at 21:18
  • Sounds like you need a $1 raise or a very, very small second job.
    – user32479
    Commented Feb 28, 2016 at 21:57
  • :) Thanks haha. To be honest, it'll be fine as the formal income requirement is $20,000. I'm just trying to be comfortable and get it significantly above a psychological barrier of $25,000 given some issues of being so close to the threshold as well as another side issue to do with the letter that my employer has to write for me. Plus, the immigration form will look weird given that the past few years, the income on the tax transcripts has been $60k to $70k and will now drop to $25k since taking a new job with a stipend - I have to report all those on the relevant immigration forms.
    – SimonsSchus
    Commented Feb 28, 2016 at 21:59
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Some of the 45,000 might be taxable. The question is how was the stipend determined. Was it based on the days away? The mile driven? The cities you worked in?

The IRS has guidelines regarding what is taxable in IRS Pub 15

Per diem or other fixed allowance.

You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. In these cases, your employee is considered to have accounted to you if your reimbursement doesn't exceed rates established by the Federal Government. The 2015 standard mileage rate for auto expenses was 57.5 cents per mile. The rate for 2016 is 54 cents per mile.

The government per diem rates for meals and lodging in the continental United States can be found by visiting the U.S. General Services Administration website at www.GSA.gov and entering "per diem rates" in the search box. Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). For information on substantiation methods, see Pub. 463.

If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. This excess amount is subject to income tax with-holding and payment of social security, Medicare, and FUTA taxes. Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L"

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  • Thanks for your response, I appreciate it. I had already read that section and none of the stipend is taxable as it is provided on a fixed daily rate and has been fully accounted for by the employer as an expense (for clarity, none of the stipend is reported using code L on the W-2).I have basically been looking for a way to force the stipend onto the Form 1040 so that it can be listed as income in some way for an immigration purpose (it should be noted, that we have several months before this becomes an issue and I'm trying to pre-empt it now).
    – SimonsSchus
    Commented Feb 28, 2016 at 21:54
  • @SimonsSchus I have no idea what the question is about, but I +1'd for "we have several months before this becomes an issue and I'm trying to pre-empt it now". If everyone in an unusual situation thought like you, they'd safe themselves a lot of troubles :)
    – yo'
    Commented Jun 28, 2016 at 9:22

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