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Question about Corporate housing benefits

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allegiance98

Junior Member
My company is based in PA but is opening an office in CA and looking to re-locate me to CA. My question is this:
If my company paid for my housing in CA for 6 months to make the transition easier and then after the 6 months I continued to live in the house but paid for the rent myself, would the initial 6 months of rent that the company paid out be added onto my taxable income, or would the company be able to claim it as a business expense?
Would it be better for me tax wise to have the company sign the lease and pay rent directly and then have the rent deducted from my check after the 6 months? Or for me to sign the lease and expense the rent for the first 6 months?

Any help would be appreciated as I am entering negotiations.

Thanks
 


LdiJ

Senior Member
My company is based in PA but is opening an office in CA and looking to re-locate me to CA. My question is this:
If my company paid for my housing in CA for 6 months to make the transition easier and then after the 6 months I continued to live in the house but paid for the rent myself, would the initial 6 months of rent that the company paid out be added onto my taxable income, or would the company be able to claim it as a business expense?
Would it be better for me tax wise to have the company sign the lease and pay rent directly and then have the rent deducted from my check after the 6 months? Or for me to sign the lease and expense the rent for the first 6 months?

Any help would be appreciated as I am entering negotiations.

Thanks
If this move is intended to be a permanent one, then the value of the rent is going to be taxable income to you. In that instance it would be cleaner if the company simply paid you extra money to cover the rent, and there would be no "expensing" of that rent...so it would be better if you signed the lease, and it should only be a six month lease.

If this move is intended to be temporary, but might lead to a permanent position, but you still maintain a home in PA, where perhaps your family will still live, then perhaps it would be acceptable for the company to provide you housing as a non-taxable benefit. In that instance, it would be better if the employer signed the lease, and again, only a six month lease.

Everything depends on the "intent" of the arrangement.
 

allegiance98

Junior Member
The move would be temporary but long term, the plan is to relocate to CA for
a maximum of 2 years. One motivation that I have for getting the company to sign the lease and make rent payments for the first 6 months is my credit is not the greatest and it would be difficult to be approved for a good home. additionally it seems like it would be easier on the company and me from a tax side because the company would have to give me additional income over that what the rent costs in order for me to pay the rent after taxes.

Is there a time limit one can accept corporate housing before it goes onto their taxable income? Another consideration is that if the company pays me extra for the housing, or if it goes onto my taxable income, it will push me into the next tax bracket.



If this move is intended to be a permanent one, then the value of the rent is going to be taxable income to you. In that instance it would be cleaner if the company simply paid you extra money to cover the rent, and there would be no "expensing" of that rent...so it would be better if you signed the lease, and it should only be a six month lease.

If this move is intended to be temporary, but might lead to a permanent position, but you still maintain a home in PA, where perhaps your family will still live, then perhaps it would be acceptable for the company to provide you housing as a non-taxable benefit. In that instance, it would be better if the employer signed the lease, and again, only a six month lease.

Everything depends on the "intent" of the arrangement.
 

pattytx

Senior Member
In your specific instance, one day. Your relocation is long term, even if temporary and housing expenses paid for you are taxable.
That's the way I understand it as well. And, as a payroll manager, I've had several employees in this situation, and that's how our corporate tax department determined.
 

allegiance98

Junior Member
That's the way I understand it as well. And, as a payroll manager, I've had several employees in this situation, and that's how our corporate tax department determined.
Thanks for the info everyone, it looks like there is no way to keep this off of my taxable income.
 

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