Skip to main content
The Future of Work: What Talent Wants. Learn more in our guide. >
International PEO

What Is a Remote Work Allowance? Your Guide to Stipends and Tax Relief

By April 13, 2022September 28th, 2022No Comments

A remote work allowance is a stipend that employers pay employees who are working from home for things like internet or office supplies. The same way some parents give children weekly sums of money to teach them financial literacy, employers can give allowances to their remote teams (though usually more than $5 for candy).

As more and more companies are working remotely part or full time, many employees are seeking out positions that provide innovative benefits, like remote stipends. Providing a remote work allowance shows employees that their managers care.

Since our legal team knows the ins and outs of remote work policies in more than 185 countries, we’ve written a guide to remote work stipends for businesses.

How Much Does Remote Work Cost? 

When shifting to remote working, employees may have to upgrade their internet speed. They also may experience an uptick in energy bills as their home offices use more electricity. According to one report, people may spend as much as $600 more per year on energy bills once they go remote.

Upfront, employees may also need to invest in office supplies like a desk, computer, desk chair, and other home office furnishings.

What Are Remote Work Stipends For? 

Employers give their workforce remote work allowances to help relieve some of the financial burdens of remote work, like energy bills or internet access. Since companies will no longer have to pay for an office space if they transition to remote work, that money can then be allocated to making employees comfortable at home.

Some employers, however, give employees a stipend to focus on self-care and physical or mental health rather than practical aspects of the home office. In these cases, employees can spend their allowance on things like massages, gym memberships, groceries, or other life needs to keep them healthy.

Examples of Remote Work Stipends

Different companies will have different remote work stipend models depending on what works for their roster and budget. Here are a few examples of what a remote working stipend could look like:

  • $80/month for internet access
  • $100/month for groceries
  • $50/month for home office supplies or upgrades
  • $1,000/year for career development opportunities
  • $50/month for a gym membership
  • $100/month for massages

What Should Employers Provide to Remote Workers?

There is no one-size-fits-all approach to remote work allowances. Bigger enterprises with larger remote budgets will be able to provide more comprehensive benefits than smaller businesses with smaller teams. At the end of the day, these stipends are meant to show your dispersed employees that you support their health, well-being, and ability to work.

Some things that employers may choose to provide for remote employees include:

  • Free internet access
  • Monthly happy hours to meet their remote team
  • A desk
  • A computer
  • A monthly budget for self-care
  • Free therapy or mental health support

Benefits of Remote Work Allowances

Remote work allowances can make dispersed teams feel supported without business owners funneling money into the wrong areas. With general stipends, employees have more control over their perks.

Puts the Focus on Culture

Investing in your employees builds your culture. When you provide benefits that show you care for your employees’ well-being, it can help them feel valued and improve their productivity as well as their life during and outside of work. A positive culture will also seep into things like recruitment and retention.

For example: If your employees spend most of their day sitting at their desks, they may develop back pain or start feeling stagnant. Providing allowances for massages or gym memberships can help your employees feel that you care for their physical health, which can make them happier at work.

Sets Employees Up for Success

When building a remote team, you want to make sure everyone on your roster has the tools they need to work. With a stipend for internet, energy bills, or office supplies, you can ensure that your team will be equipped to complete their to-dos without stress.

For example: Someone on your team might not be able to access quick internet speeds without financial assistance. A monthly stipend to pay their internet bill will allow them access to the tools they need to succeed.

Gives Employees Control of Their Benefits 

Sometimes, employers have good intentions that don’t translate to useful perks. With a stipend, employees can put money toward what they actually need and want. Meanwhile, employers won’t invest money into perks that aren’t actually beneficial to the company.

For example: An in-office team might spend money on catered lunches or coffees for the team that half the roster doesn’t enjoy. When going remote, this can become a grocery stipend that allows your employees to purchase what they actually need.

What Is Remote Work Tax Relief? 

Taxes for remote employees can be complicated. In some countries, employees are eligible for relief for their remote expenses. Remote tax relief usually works in one of two ways:

  • Remote employees pay less in taxes to account for utilities, work equipment, etc.
  • Remote employees receive tax refunds to account for the money they spend on utilities, work equipment, etc.

Essentially, these programs aim to provide some financial relief to employees who are working from home. However, they aren’t available worldwide and claims you can make vary from country to country.

In the U.K., for example, you can only claim relief if you have to work from home, not if you choose to. You can claim up to 6 pounds per week and any extra amounts you spend on gas and electricity, metered water, and business calls.

The United States doesn’t have any federal law for tax relief for remote employees. Some states provide relief, but it varies by state. In general, the only time U.S. employees can claim tax relief is if they’re self-employed.

FAQ

Are Remote Work Stipends Taxable? 

Cash stipends or advances for home office supplies or expenses are generally taxable, while reimbursements for supplies the employee buys are not. In the case of reimbursements, however, the expense must be “ordinary and necessary,” and the reimbursement must be documented.

When employers provide equipment such as computers or cell phones, they also generally aren’t considered taxable income even if they are used for personal reasons. Bills such as for phones or internet, however, may be considered taxable income depending on how much was used for personal reasons vs. business.

Should Employers Pay for Internet for Remote Workers? 

There is no law in the United States that requires employers to pay for internet access for their employees. However, some employees think that they should be reimbursed for their internet once they start working from home. 38% of people think their employers should foot the internet bill — of those who think employers should pay for internet, 26% believed the employer should directly pay part of the bill, 40% believed the employer should pay all of the bill directly, and 34% believed internet should be covered with a routine stipend.

Who Is Eligible for Remote Tax Relief?

For the most part, employees whose main place of employment is their home are eligible for remote work tax relief. However, eligibility for tax benefits varies from country to country. In some places, these requirements are more or less strict.

What Can Remote Work Stipends Be Spent On? 

If your employer gives you a general remote work stipend, you can spend it on whatever you want, with the technicality that your spending should be beneficial to your remote work. However, some companies give stipends for specific benefits like gym memberships, groceries, or bills. In these cases, the stipend must be spent for its intended purpose.

A Global Partner Can Help Your Remote Team

Like many things in business, remote work allowances and tax breaks vary from country to country and continent to continent. People in charge of dispersed teams may want to give this benefit to their employees but have to clear additional legal hurdles to do so. In that case, a global partner can help you navigate benefits and taxes for your entire team.

Contact us to see how we can help your business navigate remote work.