Let’s talk about that hard earned money of yours!
The Travel Tech Paycheck
There are lots of new pieces to your paycheck when you become a travel tech, so it would be good to explore the breakdown of each piece of the pie. Keep in mind that many agencies will pay out weekly.
We will start with the money that the big, bad tax man grabs from your paycheck.
Taxable Income
In your taxable income you will see:
Hourly wages
This is your agreed upon hourly rate for your contract. Just remember, the lower your hourly rate, the lower your tax bracket when tax time rolls around. However, there are some individuals who argue against accepting a lower hourly rate as it will affect your Social Security Income later on in life.
Overtime
Your overtime is taxed the same as your hourly rate. Remember, the overtime rate is NEGOTIABLE. If you want double time for working over 40 hours per week, just ask for it!
Car Allowance
Your car allowance will typically be allotted DAILY whether you worked that day or not.
Tax Free Income
In the non-taxable income you will see:
Housing Allowance
This tax free money should cover your housing costs. The cool part about this? Any excess you have can go right into your pocket. Tax free!
Remember – You can only claim this money as tax free IF YOU HAVE A TAX HOME. Basically, if you’re renting an apartment or room, or if you have a mortgage, AND if you’re working more than 50 miles from home you should qualify!
Meal Per Diem
The meal per diem is typically paid PER DAY WORKED and should cover meals during your assignment. Again, any excess you have can go right into your pocket TAX FREE.
A Word on GSA Rates
I highly, highly recommend looking into the GSA rates to ensure you’re getting a competitive rate for the area you’re working in for both housing and meals. If you’re not getting a competitive rate… NEGOTIATE that pay package up!
Get creative if your agency is unable to increase the per diems. You can ask for a higher hourly rate to make up for a lower per diem, just remember, wages are taxed.
Deductions
In you tax deductions you will see the following:
Federal Income Tax
As a W2 employee you will still see federal income tax deducted from each paycheck. Make sure you set your withholding at a level appropriate for your personal situation.
Social Security
Again, as a W2 employee you will be paying into Social Security with every paycheck. However, this only comes out of your taxable wages!
Medicare
And Medicare! Expect to see this deducted from each and every paycheck.
State Income Tax – Home State
This is where things get a little funky. You have to pay taxes to your home state while you are on assignment.
State Income Tax – Assignment State
And expect to pay taxes to the state you currently work in!
A Note on State Taxation
However, you can claim the tax difference from the state you WORKED in against the state you LIVE in and pay the difference to your home state if any money is owed after the tax credit. In other words, you shouldn’t be officially taxed twice on your money once tax time rolls around.
Pre-tax Deductions
Your pre-tax deductions MAY included the following:
Medical, Vision, and/or Dental
If you participate in your agency’s health plan you will see a deduction every paycheck for each part you signed up for.
401(k) Contributions
You will see a deduction every pay period based on the percentage you decide to contribute to your agency’s 401(k) plan.
Note: The deduction is ONLY based on your taxable income. Therefore, this means that NOTHING from your housing stipend or per diems are factored into your retirement contribution.
Reimbursements
Additional reimbursements to be looking out for include:
Travel To/From Assignment
You should see your travel reimbursement on your first and last paycheck. So, make sure you negotiate this if it is not enough to cover your travel to a location! You don’t want to be driving your car to an assignment on your own dime!
Hotel
If you need to split up your trip you can request reimbursement for a hotel stay up to a certain dollar amount, or in full if your agency will allow it.
Flights
If you choose to fly to an assignment instead of drive you should get your flight (and any baggage fees) reimbursed IN FULL!
Pro Tip: Always, always negotiate the travel reimbursement (as an extension bonus) if you do decide to extend at your current assignment. There is absolutely no reason the company cannot pay you for SAVING THEM TIME by not having to fill that slot with a new traveler.
This will give you a good idea of what to expect to see on your first travel tech paycheck!
Don’t forget to check your paychecks for accuracy, as payroll mistakes do, and will happen.
New to Travel Work?
Visit our entire travel work series here.
How do you save more of that hard earned money while on assignment? Let me know in the comments below!