Cash Allowance

For those who travel for work, a cash allowance is a welcome benefit to cover travel expenses. This way, you will not have to pay all your hotel and meal expenses upfront, and then wait for who knows how long to be reimbursed.

Cash allowances are handled in different ways depending on how much you travel and on your particular company's policies. If you are a bigwig in international sales, for example, you might be on the road just about every day. The company could then just give you a lump sum per year in addition to your salary, and then you would deduct all your expenses on your tax return.

Other companies use a "per diem" federal rate (meaning per day), so if the company sets the per day allowance at or below the federal rate and the employee completes his or her expense report, it will not be considered part of the employee's wages.

The term "cash allowance" is also used by auto dealerships as an incentive for customers to buy a car now. The allowance is subtracted from the retail price and is usually good for only one or two months. However, a good negotiator can usually get a better deal than just a cash allowance.

All of this is very different from a "cache allowance," which has to do with the DRAM on your computer. (Four nerds are laughing at this joke. Some things, you just do for a small audience of your own.)