Expert: John Kirk, CPA Date: 7/25/2008 Subject: Tax on Housing
Question QUESTION: I have worked at a public university for 18 years as the Director of Facilities. As part of the requirement for the position, I am required to live on campus in a university provided house. The current administration has made the decision to now reduce my base salary and the amount would be considered as payment for the housing. Also, this is being shown as taxable income to me but is not used to contribute to my state retirement. If living in the house is a requirement for the position, how can I be charged for the housing? And why wouldn't it be considered toward my retirement?
Thanks,
Lonnie Johnson
ANSWER: Employer provided housing is considered compensation to you even though you are required to stay on campus.
The amount of rent that is given to you as compensation should be deducted on form 2106 as employee expense.
As far as being eligible for retirement, that is a matter that should be addressed in your Summary Plan Description and an attorney in your state should be able to address those questions.
John Kirk, CPA
www.johnkirkcpa.com
---------- FOLLOW-UP ----------
QUESTION: Thanks John. In doing addtional research, I looked at the Federal Tax code. How does Title 26, Subtitle A, Chapter 1, Subchapter B, Part III, Sec. 119(a) apply in this case? As I read this, lodging provided by the employer on employer property as a condition of employment can not be included in gross pay and is not a taxable benefit. Section 119(d) speaks specifically about educational institutions. Looking forward to you reply. Thanks again.
Lonnie
Answer Sec 119 is applicable, why your employer is considering a portion to be included as compensation may be related to the exception for inadequate rental.
The institution is including the excess of the rental value over the rent paid as additional compensation to you. Which is the correct application of Sec 119(d)2.
What are you paying for rent, and what is the average rental value of your unit?
