Tax Law (Questions About Taxes)/housing allowance


If a company provides a contractor with housing, is the value of the housing taxable income to the contractor?

It depends on the nature of the housing.

In general, employer provided housing is taxable.

However, it may be excludable from your taxable income if it meets three conditions.

(1) The employer must furnish the lodging on its business premises.

(2) The lodging must be furnished for the convenience of the employee, which means that the employer must have a valid business purpose for providing housing beyond giving the employee additional compensation. For example, if the employer’s work site is located a substantial distance from other housing options, the IRS would likely conclude that the employer is providing the lodging for the convenience of the employee.

(3) The employee must also accept the lodging as a condition of employment, which means that the employee cannot have the option of accepting or declining the lodging.

If any of these conditions are not met, the housing is considered taxable income.

Best regards,

Tax Law (Questions About Taxes)

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Randall Brody, EA, MBA, CCP


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