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Anne
Anne, Master Tax Preparer
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I offer a weekly wage, lving accomadation with all bills paid

Resolved Question:

I offer a weekly wage, lving accomadation with all bills paid for a couple to work on my ranch, is there a minimum wage that I can pay, as the accomadations should count for something right? and what is the tax structure that I should be withholding, based on just the wage or the lving accomadations?
Submitted: 5 years ago.
Category: Tax
Expert:  Anne replied 5 years ago.
HiCustomerbr />
Thank you for using justanswer. Since having the employee live on your ranch would be for your convenience, the Wages not paid in money. for the room and board would not be subject to any tax withholding.

You may basically offer as cash wages the going rate in your area, and you're correct that the value of the room and board should absolutely be considered when determining the amount of cash wages that you will be willing to pay. You must at least meet the Federal minimum wage of $7.25/hr, but judging from the wording of your question, I think that really isn't much of a problem.

To some extent, the value of the room and board is subjective, depending on the type of lodging, general condition of the building, etc.

Your withholding requirements for Federal, state, and all payroll taxes will be on the cash wages only, not the value of the room and board, again, since this would fall under the "for the employer's benefit on the employer's premises, and as a condition of employment".

Please see below:

Publication 15 (2009), (Circular E), Employer's Tax Guide

I hope this helps.


Customer: replied 5 years ago.
OK I think I have it, let me just make sure I understand. 7.25 per hour for a 40 hour work week would be 290, per person, I am paying them 250.00 per week per person plus they have a 3 bedroom house that thecouple and their 3 childre live in, as well as I pay for all their utilities, do you think I have met the minimum wage requirement by doing this? And is it legal for the employer 9me) to deduct the employers portion of the fica taxes? I ask this, as it it what the ranch next to us does to their employees, ad it is what the curret couple asked me to do (they came from there) I did not think that was legal, and have no problems paying my portion of their taxes, but just thought as long as you were answering I would pose that. I will accept your answer and thank you
Expert:  Anne replied 5 years ago.
Yes, I believe you have met the minimum wage requirement. Employers are always entitled to deduct their portion of payroll taxes as a business expense, which again, you will only pay on the cash wages, not the value of the room and board if it met all the qualifications (for the employer's convenience, on the employer's premises, and as a requirement of the job).

I hope this helps clarify things for you.
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1922
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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Anne
Anne
Master Tax Preparer
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Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses