My salary is 55,000 per year, I pay $700 per month in rent. Because they are a non profit, they take the position that they are not landlords so they adjust my salary and classify $700.00 as a "housing allowance", then they deduct it as meals and lodging. The problem is now my earnings have been misprepresented and underreported by over $100,000 as I have worked for this employer for over 15 years. DO I have a right to insist they correct this. I have brought this up many times and they are vague and never give me a straight answer. I am afraid I will lose my job if I create too many waves. At this point I do not want to be stuck having to prove what my true wages are if I lose my job, become diasabled or retire. I am not sure how to proceed.

Where is this at so we know which laws will apply. There are a number of countries that speak English and have a currency that is Dollars. USA, Canada and Australia are just the first three that come to mind.

First - please tell us are you are a member of the clergy, because special rules apply regarding the treatment of the housing allowance if you are.

If not, then any housing allowance that they provide is taxable, just like regular wages. The amount of the housing allowance should be included in your W2 as taxable benefits, and social security taxes should be withheld on it as well. Are you saying that they are not withholding taxes or SS on the amount? And so you are concerned that your wages are under-reported to the SS administation?

I am in California and not a member of the clergy. My wages are under reported by over $100,000.

Maybe not, you say you are paying rent ? Who do you rent from the non profit ? Or does the non profit pay the rent for you ?

There are various types of non profit employment where housing is included, there are 1/2 way houses, group homes and more where you will live and work ?

If I follow your logic, you are saying that you have a salary, they add $700 as a housing allowance to that salary, then they deduct $700 for "meals and lodging." If this is correct, please tell us why you think your wages are "under-reported?" Specifically - do you know whether they are withholding income and SS taxes on only the wages, or on the wages plus the $700 allowance? On last year's W2 form look at the wages entry in Box 1 and the SS and Medicare wage amounts in boxes 3 and 5 - do these amounts include the housing allowance amount?

I am hired at a set salary. I also am provided a housing unit for which I pay $700.00 rent. They do not add $700 to my salary, they adjust my salary to total the rent and the new "adjusted" salary. They are not giving me a housing allowance, they are misrepresenting it. If I were to move offsite my salary would still be what it should b, 55K. I asked to pay my rent by personal check so that my pay is properly reported. They are unwilling to do this. All of my hiring documents state what my true salary is and the rent that I pay is stated. I know this is confusing, this is my frustration. They are aware they should not be doing this, I am told I should not open up this can of worms.

Sorry - you still haven't answered why you think your salary is "under-reported" I assume you mean under-reported to the IRS, correct? Deductions for things like housing and group life insurance reduce the amount that you receive in your pay check but do not reduce the amount that is reported to the IRS as wages (unless you are a member of the clergy). So again - please tell us whether boxes 1, 3, and 5 of your W2 shows an amount that is reduced by the "meals and lodging" deduction or not.

It shows the amount that is reduced.

And I guess my question is , why does this really matter, if you are being paid properly.

Because I am not and probably not articulating correctly. I don't get why you do not understand it. Thank you for your thoughts.

I did some more investigation and found that employer-provided lodging may be tax-free if all three of the following conditions are met:

1. Lodging is provided on the business premises,
2. It is provided for the employer's convenience, and
3. It is a condition of your employment.

Do all 3 conditions apply to you? If yes, then in effect they are paying you $700 less but you have the tax-free use of housing. If instead they paid you $700 more in salary and you wrote them a check for $700 each month then your reported wages would be higher, and hence your income and social security taxes would be higher. Are you sure this is something you want to fix? Ideally what they should have told you is that your salary is $46.6K per year, and that you'd be getting free housing equivalent to $8400/year. I really don't understand what advantage there is in doing it their way. But it works out the same.

But if in fact you don't meet all 3 conditions above then the housing benefit should be taxable, and in that case the amount of wages reported to the IRS ought to be the $55K amount. But be forewarned - if they fixed this now you would see a huge hit in your take home pay as they would be forced to make up the underpayment of payroll tax and under-withheld income tax out of your last few paychecks of 2011. Again - is this something that you really want to have "fixed?"

Thank you for taking the time to explain this to me, I truly appreciate it. Yes, all three conditions apply to me. My concern is that my salary is 55k, because of how they are classifying this, if I were to become disabled, unemployed or drew social security, benefits would be paid based on 46.6K and not my true earnings of 55k. I don't know, it just doesn't seem right. I would prefer to have an accurate represention of my earnings, and pay rent like I would do if I live off site. So are you saying if I had this fixed, I would lose out in the long run? Why are they avoiding doing so if they have nothing to lose?

I think most people would agree that they'd rather have a tax-free benefit than a taxable one. Since this is tax free it's like your other tax-free benefits, such as employer-provided health insurance or life insurance. There's an argument to be made that the total value of your employement includes all these things. But because we don't pay tax on them we generally don't think of them as wages. If you were to apply for a job with a different employer you could list your salary history as $50K inclusive of lodging benefit, and indeed it seems that's what your pay stub actually shows.

Yes, any unemployment or SS benefits would not be based on the lodging amount, but over the years you have saved roughly $10,000 in income taxes (I'm assuming a 10% tax rate on $100K in income) plus $5,600 in SS/Medicare taxes. And your employer has also saved the same amount in SS/Medicare payroll taxes.

The proper way to accomplish this is the employer should be adding the $700.00 rent to the paycheck and then deducting the same amount for tax purposes. This way your salary is not under reported.