Workers` benefits are taxable for the worker because they are part of the worker`s income. The housing allowance for employees cannot be taxable for employees if the three conditions are met: the employees` housing contracts create a tenant-tenant relationship between the employer and the employee. If you are considering making housing available to staff, you would be well advised to have a housing contract for employees; without one, you won`t be able to remember your expectations. Your employees must have a copy of the agreement, as they must be aware of the terms of the agreement and what you can expect from you with regard to your responsibilities. Giving housing to a worker or offering a housing allowance because he or she has a long commute does not meet the definition of a condition of employment. The condition of the employment requirement means that the employee cannot do the work without staying on your property. If the housing allowance is not the responsibility of the employer, it must be included in the employee`s income for the tax return. You must include this value in the employee`s annual W-2 form in Box 1. Use the fair value of the costs to determine the amount. The Tax Reduction and Employment Act 2017 allowed workers to deduct unpaid housing and other expenses not reimbursed as expenses other than those covered by Schedule A.
A first decision that needs to be made when housing employees is whether you want your employees to occupy your unit as a tenant or under license. A license means that the employee is there under the owner`s permission and that the apartment is directly related to his or her employment. It is easier to dislodge an employee when the employee is in the apartment under a license. However, there is a much greater risk that housing will be treated as part of a worker`s wages, which could increase overtime pay. If the employee is treated as a tenant, it is easier to separate the accommodation from an employee`s salary. The downside of the lease is that it is not so easy to evict the resident at the end of the employment. State law sets the legal minimum amount of termination to be granted before the eviction of a residential tenant. The minimum is usually 30 or 60 days, depending on the type of lease. indicate in the written agreement who is responsible for the cost of the benefits. In many cases, you can set up procurement services on behalf of staff.