Employer provided housing

What is the name of your state? None.
I live in Tokyo and work for a Japanese company. I have foreign earned income and my employer provides a rented apartment for 20% of what the actual rent would be if I were to lease it on my own. However, my employer actually leases the apartment and charges me 20%, which is taken out of my salary. Is the 80% that I do not see, considered taxable income?
Thank you.

himiko said:

What is the name of your state? None.
I live in Tokyo and work for a Japanese company. I have foreign earned income and my employer provides a rented apartment for 20% of what the actual rent would be if I were to lease it on my own. However, my employer actually leases the apartment and charges me 20%, which is taken out of my salary. Is the 80% that I do not see, considered taxable income?
Thank you.

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It depends on why the employer provides the housing to a great extent.

How long have you been living in Tokyo and how much is your foreign earned income? What is the nature of your employment and why does the employer provide the housing?

Thank you for your response.
I have been with the company in Tokyo for 2.5 years. My salary is about $120k/year. I am a regional manager hired for my expertise in my field. Most of the US employees live in the same area, which makes them easily accessible to the company. The company is a Japanese corporate affiliate of a US corporation.

himiko said:

Thank you for your response.
I have been with the company in Tokyo for 2.5 years. My salary is about $120k/year. I am a regional manager hired for my expertise in my field. Most of the US employees live in the same area, which makes them easily accessible to the company. The company is a Japanese corporate affiliate of a US corporation.

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I would suspect that the housing could be considered to be supplied for the convenience of the employer, in which case it would not be taxable income....particularly based on what I know about Japanese industry and what they expect from their employees.

However, that is not an official answer. I can't give an official answer without doing research, and honestly, during tax season I am unwilling to do serious research for free.

Now you're starting to get into fancy tax. Not exeedingly fancy, but there are interactions and specific facts where it would be best to see a person experienced with such things. If in fact your housing is not taxable (I don't yet hold that opinion, just suppose.), then you would get a reduction in your available foreign tax credit.

The original code section you might want to review is section 911 and the regs at 1.911. As LdiJ said, depending on the particular facts, there may need to be research done in order to find the tax treatment of the housing.

Thank you both for your input. I have done some further research but still cannot find a definitive answer.
Actually I would like to move to a less expensive area but since the employer renewed the lease last September for another two years, I am stuck here until at least September 2008. Even at that point, my employer may refuse to move me since a move is quite costly and is at company expense. However, as I previously mentioned, because of my position, my employer requires that
I am relatively close to work, which means residing in downtown Tokyo, where the rent is quite high. If it wasn’t for this job, I would be residing in my wife’s home, which is about 200 miles north of Tokyo, where the rent is about one tenth the cost. There is no company compound with residential facilities; therefore, everyone, including the company president, resides in downtown Tokyo.
My employer leases the apartment that I live in and charges me rent and takes the rent, about $1,600 a month, out of my monthly pay. The actual lease for the apartment is a lot more than what I pay, but I never see that since my employer actually has the lease and merely sublets the apartment to me.
I guess I am looking for a clear cut, black and white answer for a situation that appears to have a lot of gray in regards to whether or not the difference between the actual lease amount that the employer pays and what the employer charges me for rent is taxable income. I want to do the right thing but like anyone else I also do not want to pay more taxes than what I am legally required to.