I sold my house to move. Employer asked me to stay 2 months, temporary housing reimbursed. Is this taxable to me?

[bbarnett103]

I would have left my employer earlier, but they asked me to stay as a benefit to them.  Why woudl this be taxable to me?

[rjs · Accepted solution]

Yes, the reimbursement is taxable income to you. It should be included in the wages on your W-2 at the end of the year. All payments by an employer to an employee are treated as wages and are taxable, no matter what the reason for the payment is.

(The only exception would be reimbursement of business expenses under an accountable plan, but this does not appear to be that.)

[bbarnett103]

Thank you for your response.  I had already paid my landlord and submitted to my employer for reimbursement.  So, because they are putting it through payroll, I am not receiving back what I had paid.  I was expecting this to work similar to an expense report reimbursement.

[rjs]

I expect that it is not being treated as an expense report reimbursement because the cost of an employee's housing is not an ordinary business expense. I think your employer is handling it correctly.

[Opus 17]

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@bbarnett103 wrote:

Thank you for your response.  I had already paid my landlord and submitted to my employer for reimbursement.  So, because they are putting it through payroll, I am not receiving back what I had paid.  I was expecting this to work similar to an expense report reimbursement.

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Everything your employer pays you as compensation for your services is taxable income, unless it falls into one of the specific benefits categories.  Housing is not tax-free unless it is required as a condition of employment and is part of the job (such as, you are an oil rig foreman and you are required to be on site 24 hours a day.  The company provides a trailer for you to live in.  That can be tax-free.  However, if you move to a new city, and the company provides a trailer for you to live in while you look for a house, that is not a tax-free benefit.

Your employer is correct in treating the value of the housing as if it were wages, subject to withholding of state, federal, and employment taxes.  That means the "net" to you is less than the cost of the housing.  They could reimburse you for more than the cost, in order to cover the taxes ("gross up" the reimbursement to cover the taxes) but they are not required to do so, that would have to be part of your contract or negotiating process with them.