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Question for the Money Doctors

Question submitted on Jul 23, 2012.

Question

A colleague of mine is a property manager at an apartment building. In exchange for her work, she receives a small monthly stipend and an apartment in the building. Does she need to report the market value of the apartment to the IRS as income? She is considered a part-time employee. What reporting requirements does her employer have? Thanks!

Answer

Compensation for services includes all forms of income, including money, property or services.  The value of lodging furnished to an employee is generally includable in an employee’s income.  However, there is an exception to the general rule which excludes the value of lodging from income when all three of the following conditions are satisfied.  First, the employee must accept the lodging as a condition of employment.  Second, the lodging must be furnished for the convenience of the employer.  Third, the lodging must be on the business premises of the employer.

With the limited information provided, we recommend that you contact a CPA/PFS who will be able to help you determine if you meet the above exception.  Please visit www.findacpapfs.com to find a CPA/PFS in your area. 


For additional information visit http://www.360financialliteracy.org/