Lodging Furnished to an Employee May Be Excludable as Income

Posted on November 16, 2016

The Internal Revenue Code starts out with the premise that all income from all sources, whether paid by cash, check, barter income or receiving property, shall be treated as income.

However, if the tax code provides a specific exclusion of an item from income, then that specific item is not counted as income on your income tax return. In some instances, lodging is provided to an employee either as a benefit to the employee or as an accommodation to the employer for having ready access to the talents of that employee.

The Internal Revenue Code specifically excludes the value of lodging provided to an employee if the employer provides the lodging at the employer’s business premises, the employer provides the lodging for the convenience of the employer and the employee must accept the lodging as a condition of employment.

If the lodging provided by the employer does not meet all three prongs of the test, then the value of the lodging provided to the employee will be treated as income on that person’s income tax return.

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