The Ultimate Guide to Work from Home Stipends

A work from home stipend is money given to an employee, in addition to their base salary and benefits, for them to cover expenses incurred while working remotely.

Last updated February 12, 2024 by Sarah Bedrick

 
 

People across the globe have become accustomed to working remotely.

They have more flexibility, spend less time commuting, and have greater work-life balance than ever before - which is exactly why they don't want to return to the office. In fact, a recent Gallup report found 3 in 10 hybrid employees are "extremely likely to change companies" if not offered remote flexibility.

That's why companies that adapt to the needs of their most important asset - the people! - are coming out on top as the best companies to work at.

The ideal method for supporting your remote employees, which is also the most flexible and scalable option for HR, is a remote work stipend - also known as a remote work allowance, remote employee reimbursement, or a work-from-home stipend.

We developed this guide to give you everything you need to know about remote work stipends.

Here's what is covered in this guide:

  1. What is a Remote Stipend?
  2. Benefits of Remote Work Stipends
  3. Examples of Remote Work Stipends
  4. What Expenses are Reimbursable
  5. How to Create Them at Your Organization
  6. Work-From-Home Stipend FAQs
 
 

What is a Work from Home Stipend?

First, a definition:

A work from home stipend is money given to an employee, in addition to their base salary and benefits, for them to cover expenses incurred while working remotely.

A work from home stipend can be designed for employees in one or both ways:

  1. To cover the costs an employee incurs while working from home. For example purchasing home office equipment, a coworking pass, coffee, and anything else that makes their remote work locations comfortable, productive, or successful. It can be a continuous stipend to cover ongoing expenses, or administered as a one-time equipment stipend.
  2. To purchase general perks that an on-site team has access to, but a remote employee does not, such as food, health and wellnesslearning and development perks, etc.

Further details on what they are:

  • They're also sometimes referred to as a "remote work stipend" or "remote work allowance."
  • The composition includes both taxable and non-taxable items. Employers have the option to either gross up the taxes for the employee or require employees to cover the taxes.
  • Stipends can be dispersed on a monthly, quarterly, semi-annual, or annual basis. 
 
 
remote work stipend
 

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Benefits of remote work stipends

Companies are embracing stipends and reimbursement policies to better support their employees.

The perk stipend model has numerous advantages, including improved perk and benefit management, simplified tax handling, and the ability to enhance other important aspects of the business like culture, talent retention, inclusivity, and employee engagement.

Remote work stipends are also highly sought-after by HR and finance professionals as a valuable new lifestyle benefit.

Here are even more specific benefits of a remote stipend or reimbursement program:

Flexible for all remote-work policies

One of the most impactful and relevant benefits of offering a remote stipend as a perk especially today is that it's adaptable for ANY working environment - whether it's a back to the office, 100% remote, or something in between in your own version of a hybrid work model.


IRS compliance

If you use software like Compt, IRS compliance is automatically taken care of for you, making your HR and finance teams' lives' easier.

(Note: While it's very common for companies under 100 employees to overlook the need to ensure tax compliance in their perk offerings, growing companies know how critical it is to have all employee compensation-related programs (like stipends) be done "by the book".)


Better perks

Your team gets access to a broader base of benefits without needing to increase the overall budget. Because the pool of money is distributed to people, they pick what’s best for them instead of picking a few perks that everyone gets (but rarely everyone uses).

Help employees get what they need when they need it, regardless of where they live. 


Enhance efficiency & reduce administrative burden

By eliminating the complexities of vendor management in multiple locations and the need to oversee various software systems, stipends offer a streamlined solution for HR operations.

It is widely recognized that traditional perk offerings incur unnecessary expenses on two fronts:

  1. expenditures on perks that go unused
  2. significant time investments in the selection, piloting, procurement, management, and communication of perks.

With stipends, these inefficiencies are eliminated, ensuring timely provision of individualized benefits to all recipients, thus optimizing your resource allocation and minimizing wastage of both financial and time-related expenses.


Strategic benefits for employers:

Remote work stipends offer strategic benefits for organizations that leadership loves, by aligning with company culture and values, providing scalability, promoting mindful spending, and fostering deep connections with employees.

By tailoring your companies perks to match your company's culture and values, you can offer benefits that resonate with your employees on personal levels. Whether it's a continuous learning stipend or a health and wellness stipend, they demonstrate your commitment to investing in these values.

Another strategic benefit is that they're scalable. As your company grows or undergoes headcount changes, the inherent nature of stipends is their flexibility which makes it simple to scale remote work investment up or down, while remaining relevant to your employees needs.

CFO appreciate when money is invested well, and stipends ensure that happens. When employees are given the autonomy to choose how they allocate their funds, they become more deliberate in their spending decisions. This sense of responsibility encourages employees to spend in more thoughtful ways which align with their priorities.

Remote work stipends enhance the connection between employers and their team because they demonstrate and create trust. When people get to exercise autonomy and are treated as experts of their own world, the relationship deepens.

Additional benefits of a remote work allowance:

  • A remote work allowance will ensure your company has access to a greater pool of top talent, and a better ability to retain talent who wants more flexible work-from-home options.
  • What people purchase can relate to their home working space, work-life balance, mental health, or anything else that suits them and their always-evolving needs.
  • You provide them with the best, most relevant reward they could receive. As a New York Times piece put it, so many people aim for the "big reveal" but when giving gifts, people want something they can actually use.

If you're still wondering why your remote team should have perks, here's a piece detailing why your remote employees need support like your on-site team members

[Considering between perk software vendors? Check out our guide, Comparing Perk Stipend Software: Everything You Need to Know]

 
 

9 Examples of Real-Life Remote Work Stipends

Below are nine examples highlighting the unique approaches to remote work stipends, with varying remote work policies:

1) HubSpot: A hybrid-remote company provides their people:

2) Webflow: A company with 70% of its team remote around the globe provides 3 stipends for their team:

  • $250/month for remote work expenses
  • $200/month (for everyone) health & wellness stipend
  • $1,000/year (for everyone) continuous learning stipend.

3) Basecamp: A fully remote company offers 4 stipends for their team members:

  • $100/month coworking space stipend
  • $100/month fitness allowance
  • $100/month massage allowance
  • $1,000/year continuing education allowance

4) Buffer: A fully-remote company offers several stipends as well:

  • $200/month for "Working Smarter" stipend for coffee shop working purchases
  • $500/teammate for home office set-up
  • $200/year for tech/office needs
  • Internet reimbursement stipend
  • $850/year continuous learning stipend

5) Gusto: A hybrid team with many employees working from home, some or all of the time, offers two stipends:

  • $500 one-time stipend to cover home office expenses
  • $40/month internet stipend

6) Gimkit: A fully remote company offers the following stipend:

  • $300/month remote work stipend

7) Zillow: 90% of the workforce works from home at least part of the time:

  • $450 one-time stipend for home office setup
  • $150/month stipend to cover WFH-related costs 

8) Almanac: A fully remote company with employees across the globe:

  • $400 one-time stipend to cover home office and equipment expenses

9) Calm: A remote-first company:

  • $750 one-time stipend to create a comfortable and productive WFH workspace
 
 

Learn even more about the benefits of Lifestyle Stipends

Download the free Lifestyle Spending Accounts Guide to learn why they're the most low-maintenance, budget-friendly, and inclusive benefits for your people.

 
 

What Expenses are Reimbursable in a Remote Work Stipend?

The answer to this isn't as clear-cut as other stipend categories, as it all depends on how you want to support your remote employees.

Below are some examples of eligible expenses for a work from home stipend:

  • Cell phone bills
  • Coworking space fees
  • Office equipment (i.e., laptops, monitors, webcameras, computer accessories, etc.)
  • Office furniture (i.e., desks, ergonomic chairs, bookcases, lighting, etc.)
  • Office supplies (i.e., sticky notes, notebooks, printers, filing cabinets, planners, writing utensils, paper shredders, etc.)
  • Headphones, Airpods, or noise-cancelling headphones
  • Internet bills
  • Music and podcast subscriptions
  • Productivity apps for time-management, work performance improvement
  • High-speed internet
  • Job-specific tools like Grammarly or Miro
  • Professional development
  • Electric and utility bills
  • Meals or groceries
  • Home office decorations like plants or art
  • Under-desk treadmills or ellipticals

If you'd like to see a list of other items that employees can buy with their work-from-home stipend, check out this recent post.

Below are some examples of reimbursable expenses, if you are setting up your remote work stipend to cover similar perks offered to in-office employees:

The broad-based categories are a deliberate approach to remote perks. With this approach, you're able to avoid building out a long list of vendors and initiatives you'll cover. If you do want to pick specific vendors that employees can spend with, then you may want to go with a vendor-based approach.

 
 

Calculate the cost of your remote work stipend vendors

Use our Perks Vendor Cost Calculator to determine the expenses associated with your remote work stipend vendors. Identify potential savings by consolidating with Compt (which your CFO will love).


 

Here’s How to Set Up a Remote Work Stipend:


1. First, determine how much you want to offer your team members within what timeframe.

Some examples include offering $100/month, $500/quarterly, or $2,000 annually.

Decide whether you want to offer a stipend only to remote team members or one to them in addition to what you offer all employees.

[If you are interested in getting insight into what the most successful companies do, we are happy to share examples and use cases our customers are seeing success with. Reach out to talk to a stipends expert today.]


2. Secondly, select your stipend spending categories.

In the examples above, you'll notice that they most often surround a category of spending like health and wellness, continuous learning, family, or travel.

Doing it this way allows you to create a custom program for your team and then allows 100% personalization for them. 

If you're looking for ideas for spending categories beyond a remote stipend, consider tying them to your company's culture, goals, or important cultural initiatives.


3. Once you have this information determined, now it’s time to decide how you’ll manage the process.

Your options include:

Managing the remote work stipend manually

If you choose this option, be prepared to set up a process to track purchases, receipts, balances, approval, and paid perks, as well as rejections or ones which need further review. Consider using Google forms to track submissions, and Excel or Google sheets to track progress, and create a process to track the nontaxable vs. taxable (for IRS compliance).

Choose stipend software to help you manage this

Options like Compt can help communicate your programs to your team members, track balances and spending, scale the process for you, automate a large portion of work, and provide valuable data insights around engagement and utilization. For situations where IRS compliance is a non-negotiable, Compt will make you and your finance team's job much easier because it's 100% IRS compliant.

If you're looking for more information, we wrote an in-depth guide to set up a lifestyle spending account here.

 
 
 

Office pizza parties and branded thermo mugs just aren't cutting it anymore

 

Other Types of Stipends

Below is a list of popular stipend categories:

 

Work-from-Home Stipend FAQs

1. Are work-from-home stipends taxable?

Generally, work-from-home stipends are considered taxable income.

Work-from-home stipends are not considered part of an employee's wages or salary—so the employer will not withhold taxes from that income, including Medicare or Social Security.

But work-from-home stipends are considered income.

That means that they'll increase your taxable income for the year—so in the end, you'll end up paying taxes on your stipend income.

2. What is a normal work-from-home stipend?

Because companies approach work-from-home stipends so differently, there's no single typical example of a work-from-home stipend. For example, some companies give employees a one-time stipend to help them set up their home office (like Google, which gives remote employees a $1000 stipend to get their home offices up and running.) Others opt to give employees a monthly stipend (for example, $75 per month) to cover WFH-related costs, like internet, phone, and electricity. And others opt to do both.

Not only are the payment structures different, but the amount of the stipends can vary based on a variety of factors—for example, the cost of living in the area where the employee works from home or whether an employee is fully remote or spends some time in the office.

3. Is an internet stipend taxable?

As mentioned, while stipends are not considered wages, they are considered additional income—and, as such, are also considered taxable.

However, how a company pays for your internet can determine if it's taxable. Stipends are generally taxable—while reimbursements are not. So, if a company gives an employee a stipend, it's considered taxable. But if they reimburse the employee for out-of-pocket expenses—and include internet costs in those expenses? The reimbursement would not be subject to taxes.

4. How many companies offer remote work stipends?

There's no way to know exactly how many companies offer remote work stipends. For example, buildremote assembled a list of 101 companies that offer WFH stipends. But that list is by no means exhaustive and doesn't include small companies—many of which offer a variety of perks to their employees, including remote work stipends.

While there's no way to pin down exactly how many companies are offering WFH stipends, it is fair to say that the number of companies offering remote work stipends increased in the wake of COVID-19, when a huge percentage of companies shifted to full or partial remote operations.

Sarah Bedrick

Chief Marketing Officer

Prior to Compt, Sarah worked at HubSpot for 6+ years, where she helped to build, scale, and grow the HubSpot Academy division. She is obsessed with understanding what makes a company culture great, being a career and life coach to people in tech, and creating cherished memories with her husband and two young kids. Her favorite Compt stipend category is Health & Wellness.

 
 

Ready to make managing your remote work stipend a breeze?

With Compt's stipend reimbursement software, you can easily create, automate, and manage your remote stipend programs while integrating with your existing payroll systems and track engagement rates in real-time.

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