Are Lodging and Meal Reimbursements in Jeopardy?
https://info.groom.com/19/1617/uploads/house-ways-and-means-committee-reconciliation-options.pdf (see page 10)
Since President Trump and the new Congress has been seated, the PDF linked above has been circulating on social media sites for traveling professionals and has created quite a stir. It is a 51-page list of tax provisions that are being reviewed by Congress for changes that would result in increased tax revenues to offset other potential changes in tax law that would decrease tax revenue. Just like any budget, if you add an expense you need to offset it with savings in other areas. In tax policy, giving deductions and credits is an expense while removing deductions and credits creates revenue.
One of the tax provisions in the list under review is the “Exemption of Employer Provided Lodging and Meals”. The social media posts assert that this will be the end of tax-free reimbursements for lodging and meals for traveling professionals. On the contrary, this is not what is being addressed.
In the tax code, there is a difference between an EXEMPTION of employer provided lodging and meals and a DEDUCTION for lodging and meal expense reimbursements. The former is governed under Internal Revenue Code Section 119 and the latter, under Code Section 162 and 62. Reimbursements for lodging and meals for employees traveling on their employer’s business (like a travel nurse working a temporary assignment) are not the focus of this entry.
The EXEMPTION highlighted in the list is the practice of some employers to provide permanent lodging and meals on the employer’s premises. For example, a hospital that requires a medical professional to live on campus as a condition of employment is allowed to exempt the value of the housing from the employees’ wages. Likewise, an employee of a university may be required to live on campus as a condition of employment. In both cases, the lodging is a tax-free benefit of the position. Some employers provide free meals on campus for staff as a part of a company benefit. Currently these benefits are exempt from wages and deductible to the employer. If this exemption is removed, the employee will have taxable income based on the value of the lodging or the meals provided.
Traveling professionals (especially in healthcare), engineering, transportation etc. are incurring travel expenses while furthering the business interests of their employer. Those being provided free lodging exemptions are doing the same, however, they are generally not in “travel status” like travel nurses, Locums, flight attendants, pilots etc. Their role is more permanent.
Sooooo, take a deep breath. The new administration, for the most part, is business friendly and in our times, mobility is an essential expense of doing business. Those deductions are not going away anytime soon.
