Employee stipends are one of the many benefits associated with working for a company. With the rise of virtual teams, stipends can be great replacements for perks that typically come with an office or in-person events. So what are these stipends? What can they be used for? And how can you access these free funds from your employer?
This resource shares all the different types of employee stipends and benefits that you can receive from your employer. You might be surprised to find out that they are not always advertised! Here’s all you need to know about your employee stipends and how they compare to others’ at different companies.
What is an employee stipend
First, let’s define what a stipend is. A stipend is a fixed sum of money provided to an individual or group to offset expenses of a dedicated spending category. In the context of a company, these are often offered to employees to spend on things like meals, transportation, professional development, volunteering and the like. An Employee Stipend, also known as a fringe benefit, is an allowance provided to workers to spend in a category of the companies choosing. A fringe benefit, or employee stipend supplements an employee’s salary and comes in the form of credits, subsidies or reimbursements.
Many employee stipends are often gifted on a recurring basis. For example, health and wellness stipends are mostly offered monthly. Other stipends may be offered quarterly or annually. In other words, these stipends must be used on a purchase within the slotted period of time or else they are lost. There are also stipends that act as never expiring credit and those that must be used by a certain date.
As an example, a company might offer an employee $2,000 worth of professional development funds to spend on career related learning. Another company may provide $50 a month to spend on home internet or a cell phone plan if they work from home. For companies, it’s a thoughtful way to treat employees, while benefiting the larger organization.
Why do companies offer employee benefits
Companies offer their employees benefits for multiple reasons. The main reason being: to attract and maintain top talent. Just like strong 401K and healthcare benefits, fringe benefits are just another perk to keep employees happy. In many ways, these additional allowances are just additional income, despite restricted spending to a single category.
In addition to a thoughtful perk, stipend categories are thoughtfully chosen in the best interest of the employee and the company. For example, professional development stipends often have the highest spending limit in the thousands of dollars. If employees take advantage of it, it will not only benefit the employee, but the company too. Health and wellness stipends are the same in that a healthy employee.
Different types of employee stipends
There are an endless number of benefits that employers may offer employees. Most of the time, the hope is that the funds will be used in a way that ultimately benefit the employees and in turn the company. It’s unlikely that they’re giving money away out of the goodness of their own hearts – but hey, we’ll take it.
Popular stipends and benefits employers offer and how much they give
- Professional Development: benefit for employees to spend on professional learning and development. Professional development related items like online courses, career coaches, and admission to conferences can be bought and reimbursed ranging from $1,000-$3,000 per year.
- Health and Wellness: funds to spend on health and wellness related expenses such as gym memberships, fitness app subscriptions, and home gym items. The typical allowance is $50-$100 per month.
- Remote Work: reimbursements for things that help assist with work from home. The perfect home office setup can be paid for through a remote work stipend. One time stipends range from $300-$1,000. Monthly stipends can range from $50-$200.
- Productivity: a stipend for boosting productivity. Can be used on things like note taking apps, Music subscriptions and whatever else you need to get stuff done. Typical price range is $20-$50 a month.
- Charitable Giving: money devoted for employees to give to a cause of their choice. This may be anywhere from $100-$250 a quarter.
- Internet: stipend to reimburse costs for internet at home. Chances are you have internet at home anyways, so this will save you an additional $30-$60 a month.
- Cell Phone: funds to cut back your costs on you cell phone plan. You probably have a cellphone too, so these stipends will save you $30-$50 a month.
- Food Stipend: instead of catered meals, employees might get additional funds to purchase food. Reimbursements might range from $300-$500 a month if you’re lucky.
- Transportation: commuter benefits offer employees a way to reimburse travel to and from the office. This might put anywhere from $50-$300 a month in your pocket.
- Financial Wellness: a benefit meant to be spent on improving financial wellness. This includes things like hiring a wealth manager, finance courses and seminars, and finance-related apps. Typical price range is $50-$100 a month.
How much do companies give for stipends
The amount that companies give to employees for fringe benefits vary from company to company. Furthermore, so will the types of stipend offered. Based on our research these are estimates of the most common types of stipends offered to employees today in 2021.
Professional Development Stipend: $1,000-3,000 per year
Health and Wellness Stipend: $30-$100 per month
Remote Work Stipend: $50 per month (Recurring), $500-$1,000 (One-Time Stipend)
Are employee stipends taxable
Stipends provided to employees by their employers are considered taxable income. Professional development, health and wellness and remote work purchases that get reimbursed should be reported on taxes.
Generally, all funds provided to employees by employers are considered taxable income, including gift cards. So if you receive any stipends from your employer, you should set aside money to pay taxes at the end of the year. However, Social Security and Medicare taxes are not taxed because they are not paid out by companies and not considered wageable income..
How employee stipends work
Employee stipends are allowances given to employees to spend on selected categories like professional development, wellness, and remote working. They are reimbursements. Meaning that employees must buy the items first, and then are paid back the full amount once expenses have been submitted and approved.
If your company has one of these reimbursement programs, they likely will use a software like Expensify to submit, track and approve expenses. It is possible that a company will provide funds upfront in a prepaid debit card like your FSA, but this is uncommon. You will need to refer to your company’s policies for specific instructions on how to get reimbursed, spending limits, and specific details.
What should I buy with my stipend
There are hundreds of products that you can purchase with your learning, wellness and remote work stipends. That’s why we built Spend My Stipend as the one-stop-shop for any expenses that can be reimbursed by your employer. You can browse and search for all the items we’ve worked so hard to curate in our shop. You can also find a lot of good articles on what to buy with specific stipends in our blog. We’ve done the hard work for you – all you need to do is pick something and buy it!