Exclusion From Employee Wages albergo aeroportuale economico WroclawYou can exclude from an employee's wages the value of meals andlodging you, or a third party on your behalf, furnish to the employeeor the employee's spouse or dependents if you meet all the followingtests. Test 1. You furnish the meals or lodging onyour business premises. Test 2. You furnish the meals or lodging foryour convenience. Test 3. In the case of lodging (but not meals),you require your employee to accept the lodging on your businesspremises as a condition of his or her employment. However, if an employee can choose to receive additional payinstead of meals or lodging, you must include the value of the mealsor lodging in the employee's wages. The examples at the end of thischapter will help you apply these tests. TaxTip: The value of meals and lodging you properly exclude from anemployee's wages is not subject to social security, Medicare, andfederal unemployment taxes, or income tax withholding. Test 1--On YourBusiness Premises This generally means the place of employment. For example, mealsand lodging you furnish to a household employee in your private homeare furnished on your business premises. Similarly, meals you furnishto cowhands while herding cattle on land you lease or own arefurnished on your business premises. Test 2--For Your Convenience Whether you furnish meals or lodging for your convenience as anemployer depends on all the facts and circumstances. You furnish themeals or lodging to your employee for your convenience if you do thisfor a substantial business reason other than to provide the employeewith additional pay. This is true even if a law or an employmentcontract provides that they are furnished as pay. A written statementthat the meals or lodging are for your convenience is not sufficient. Substantial nonpay reasons.The following meals are furnished for a substantial nonpay businessreason. Meals you furnish during working hours so your employee willbe available for emergency calls during the meal period. However, youmust be able to show that these emergency calls have occurred or canreasonably be expected to occur. Meals you furnish during working hours because the nature ofyour business restricts your employee to a short meal period (such as30 or 45 minutes), and the employee cannot be expected to eatelsewhere in such a short time. For example, meals can qualify if thepeak workload occurs during the normal lunch hour. But if the reasonfor the short meal period is to allow the employee to leave earlier inthe day, the meal will not qualify. Meals you furnish during work hours because your employeecould not otherwise eat proper meals within a reasonable period oftime. For example, meals can qualify if there are insufficient eatingfacilities near the place of employment. Naxos hotel roomsMeals you furnish to a restaurant or other food serviceemployee for each meal period in which the employee works, if youfurnish the meals during, immediately before, or immediately afterwork hours. For example, if a waitress works through the breakfast andlunch periods, you can exclude from her wages the value of thebreakfast and lunch you furnish in your restaurant for each day sheworks. Meals you furnish immediately after working hours that youwould have furnished during working hours for a substantial nonpaybusiness reason but that, because of the work duties, were not eatenduring working hours. All meals you furnish to employees on your business premisesif more than half of these employees are furnished meals for asubstantial nonpay business reason. Meals you furnish to promote goodwill, boost morale, orattract prospective employees.These meals are considered furnished in your business for payreasons. They are not furnished for your convenience unless you alsohave a substantial nonpay business reason for furnishing the meals. Meals furnished on nonworkdays or with lodging.The value of meals you furnish on any nonworkday is normally notfurnished for your convenience. However, if your employees must occupylodging on your business premises as a condition of employment, asdiscussed later under Test 3--Lodging Required as aCondition of Employment, do not treat the value of any meal youfurnish on the business premises as wages. Meals with a charge.The fact that you charge for the meals and that your employees mayaccept or decline the meals is not taken into account in determiningwhether meals are furnished for your convenience. If you furnish meals for which you charge the employees a flatamount whether or not they eat the meals, do not include the flatamount you charge in your employees' wages. Whether the value of themeals is wages depends on whether you meet Tests 1 and2. If you do not meet both of these tests, you must includethe value of the meals in your employees' wages whether it is more orless than the amount you charged. If no evidence indicates otherwise,the value of the meals is the amount you charged for them. Test 3--Lodging Requiredas a Condition ofEmployment This means that you require your employees to accept the lodgingbecause they need to live on your business premises to be able toproperly perform their duties. Examples include employees who must beavailable at all times and employees who could not perform theirrequired duties without being furnished the lodging. It does not matter whether you must furnish the lodging as payunder the terms of an employment contract or a law fixing the terms ofemployment. You may furnish the lodging to your employees with or without acharge. If you charge a flat amount for lodging whether or not theemployee accepts it, do not include the flat charge in the employee'swages. Whether the value of the lodging is wages depends on whetheryou meet Tests 1, 2, and 3. If you do not meetall of these tests, you must include the value of the lodging in youremployees' wages whether it is more or less than the amount youcharged for it. If no evidence indicates otherwise, the value of thelodging is the amount you charged for it. Examples These examples will help you determine whether to include in youremployees' wages the value of meals or lodging you furnish to them. Example 1 (Meals).You operate a restaurant business. You furnish your employee,Carol, who is a waitress working 7 a.m. to 4 p.m., two meals duringeach workday. You encourage but do not require Carol to have herbreakfast on the business premises before starting work. She must haveher lunch on the premises. Since Carol is a food service employee andworks during the normal breakfast and lunch periods, do not includethe value of her breakfast and lunch in her wages. Example 2 (Meals on nonworkdays).The facts are the same as in Example 1, except that youalso allow Carol to have meals on your business premises withoutcharge on her days off. You must include the value of these meals inher wages. Example 3 (Meals).Frank is a bank teller who works from 9 a.m. to 5 p.m. The bankfurnishes his lunch without charge in a cafeteria the bank maintainson its premises. The bank furnishes these meals to Frank to limit hislunch period to 30 minutes, since the bank's peak workload occursduring the normal lunch period. If Frank got his lunch elsewhere, itwould take him much longer than 30 minutes, and the bank strictlyenforces the time limit. The bank does not include the value of thesemeals in Frank's wages. Example 4 (Meals).A hospital maintains a cafeteria on its premises where all of its230 employees may get meals at no charge during their working hours.The hospital furnishes meals to have 120 employees available foremergencies. Each of these employees is at times called upon toperform services during the meal period. Although the hospital doesnot require these employees to remain on the premises, they rarelyleave the hospital during their meal period. Since the hospitalfurnishes meals to its employees to have more than half of themavailable for emergency calls during meal periods, the hospital doesnot include the value of these meals in the wages of any of itsemployees. Example 5 (Lodging).A hospital gives Joan, an employee of the hospital, the choice ofliving at the hospital free of charge or living elsewhere andreceiving a cash allowance in addition to her regular salary. If Joanchooses to live at the hospital, the hospital must include the valueof the lodging in her wages because she is not required to live at thehospital to properly perform the duties of her employment.