I am considering a job that comes with housing and food. The pay is low, but these benefits offset that by quite a bit -- depending on what it does to my taxes! I am neither clergy nor military. The job is in California. How do I compute taxes on these benefits?
2006-12-18 10:03:50 · 5 answers · asked by pj 1 in Business & Finance ➔ Taxes ➔ United States
Unless specifically spelled out by the IRS (you had pointed out housing for clergy), everything you receive, either in the form of cash or noncash compensation, is considered taxable income to you. The housing and food allowance you receive will be considered taxable compensation to you, regardless of whether it is considered required by the job or not.
The question that you need to resolve then, is to confirm on the offer letter whether the housing and food allowances are paid to you gross (you are responsible for the taxes on these allowances) or net (the company is responsible for the taxes on these allowances and will gross you up for taxes on it).
To illustrate gross versus net, say the company will pay you an allowance of $1,000. If you receive this gross, the company reports $1,000 of compensation, and then they withhold social security, medicare, federal and state income taxes on this. You will receive a net of say $600 on your paycheck. If you receive this net, the company is saying that after taxes, you will receive $1,000. So the company will gross it up for taxes, effectively paying the taxes on this $1,000, plus paying the tax on the tax. So your paystub will show a taxable allowance of $2,000, with $1,000 being withheld and $1,000 being paid to you net.
2006-12-19 04:32:50 · answer #1 · answered by jseah114 6 · 0⤊ 0⤋
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RE:
Is housing allowance taxable?
I am considering a job that comes with housing and food. The pay is low, but these benefits offset that by quite a bit -- depending on what it does to my taxes! I am neither clergy nor military. The job is in California. How do I compute taxes on these benefits?
2015-08-10 18:55:52 · answer #2 · answered by Pippy 1 · 0⤊ 0⤋
housing allowance taxable
2016-02-01 09:18:34 · answer #3 · answered by Melli 4 · 0⤊ 0⤋
When you take the job make sure that you get something in writing that the housing and meals are required and for the convenience of the employer. With that in place those benefits are not included in your income. Your employer is likely skilled in excluding those amounts from your income.
2006-12-19 03:03:19 · answer #4 · answered by ? 6 · 0⤊ 2⤋
If the housing allowance is required for you to perform your job, then none of it is considered income.
2006-12-18 19:26:43 · answer #5 · answered by Steve 6 · 0⤊ 3⤋