Taxation on internship benefits

The cost of the car is going to be expensive and even if the employer will pay, it is going to show up as income on a W2. If he lives close to the employment, will he need a car? Yes, nice to have it but realize it is going to cost him.

After considering the housing at about $8000 and the car at $7000 it is easy to see where the prior interns were complaining about a $20k addition to income. Probably still the way to go as the $1400 per month plus all the time to commute is not going to be worth it.

My son dormed at Northeastern for an internship in the “suburbs.” The place he was working had a shuttle bus for the interns, which was great, but took minimum one hour, up to 1.5 hours each way, which was certainly a drag. He liked living in Boston, but the option of being close to work would certainly appeal to me.

Huh?? I live two states away and I can get to Boston in two hours on “public” transportation (scheduled bus line). And the internship is on the outskirts of Boston? Something’s not adding up…

I think it depends where “close to work” is for this summer intern. There are some places outside of Boston that would still be fun for a 20 something to enjoy. And there are other places that are very suburban, or urban but not with much for younger folks.

The other question is…how much free time is he going to have during the work week? If not much…then living near work might be fine…and he can Uber into Boston for fun weekends.

And there are plenty of colleges in the outlying suburbs too, or all the way to Worcester.

Still think it is going to be more convenient to take the expensive (to the taxes) employer provided housing. Convenience means more in taxes.

We’ve helped our S with this over a few summers and housing is always a pain. Employer provided or a close by campus dorm has always been our go-to solution (the less-hassle the more-better). The tax man gets what the tax man wants.

I would check with your accountant.

What town is he working in? Some have better public trans than others. I would not expect my 19yo D to live in the burbs without transportation. Your S may be less social than my D, but she would be all over zipcar and Uber, more expensive than a rental. Yes, they are there for the internship, but you don’t want them to hibernate on the weekends. I would not look at the internship as a money making opportunity to offset anything you are not paying now. So perhaps some of his earnings will have to be set aside for tax purposes. And maybe he will need a PT job to make up for the tax offset.

I don’t understand the concern over the corporate housing. As others have mentioned, the employer is very generously covering the tax obligation of the housing.

I’m very confused about a 2 hour public transportation commute - it doesn’t sound like the job is in Greater Boston by local standards.

I also can get to greater Boston in about two hours on public transport…scheduled train or bus…in about two hours. And I live in CT.

If time is the issue, than absolutely, take the company up on the housing offer. But I will say…why a car if the lodging is near the job site?

There can be a lot of transfers to get to a business in the suburbs.

I work in Andover at a large defense contractor. There is a commuter rail from North Station in Boston to Andover. If you live close to NS, and that is unlikely for an intern, then a 2 hour commute is possible. I have a friend I meet for lunch who lives in Arlington. It takes her 2 hours + to get to me when we meet up for lunch. She needs to take a bus to Aelwife. Train Park station where she changes to Orange line. Train to North Station. Then commuter Rail to Andover where I pick her up. Total miles maybe 20.

@thumper1 My D would hate to live in the burbs without transportation. Maybe my kid is spoiled, but we would figure out a way for her to have a car.

@mamom I totally agree about the Boston burbs…and said that upstream. But this is an internship…not a permanent job. It’s for the summer.

The employer sounds like they are being quite generous with compensation for lodging and…at least the kid has a place to live and a car if he wants it.

The tax liability isn’t going to be that huge…probably less than the cost of renting and parking a car in the greater Boston area for three months.

Thank you all for your insights, new perspective on taxes, about Boston burbs, company shuttles, and possible dorm living at Northeastern.

My son hates commuting, he said the most he can endure being stuck in traffic is 30-45 minutes max. one way. If he can get corp. housing within walking distance, of course no rental car needed. Otherwise take the stipend, find accommodation by ourselves ( within short distance from work place), and get a rental car.
By the way, the additional 20K to taxable income was probably for airfares & housing only. The previous intern who complained walked to work.

I’ll check other colleges’ Summer dorm living, and tell my son to ask HR if there is company shuttle for Boston area and its schedules (stops & time).

I’ll update on what company HR say regarding how grossing up works.

This post is also a warning to other interns who get similar offer, they should know its implications on their financial aid, and their tax. there is a possibility that they will owe IRS the next year.

All jobs come with income taxes due. Not sure why this should be a surprise that requires a warning. If the employer takes out the withholding, then unlikely to owe much ‘next year’.

I haven’t read the entire thread, but if in Boston, check out the frat houses at schools. You need to act on those quickly as they fill up fast for summer leases. IIRC, MIT had some that included a house mom for some meals.

You also don’t say where you are from. If you are coming from LA or the greater NY or DC areas, driving in Boston won’t be any big deal (although…it’s not a grid…and the roads wind about a bit).

Driving in Boston is not for the faint of heart. I think the drivers are maniacs…especially coming and going on Storrow Drive. But that’s my opinion.

If your kid has the option of lodging within a walk from work, really…Uber and Lyft are pretty plentiful for those evenings out. An option worth considering.

He will also either need off street parking…or he will need to check what is required to park ON street in Boston area. Some towns require a permit for onstreet parking.

Thumper1, we’re Californian, living in Bay Area.
Yep, we consider going Uber/Lyft too. Parking situation will also be on our mind when looking for a place.
Any info on bad areas in Boston?

Have you ever driven a car in Bay Area? Are we maniacs too LOL? This is a serious question. I need an outsider input, so I can gauge how bad the driving is going to be in Boston.

this is a recent article https://www.boston.com/cars/commute/2019/02/12/boston-worst-rush-hour-traffic