Are cash allowances for meals and lodging taxable income to an employee?

Author: Alice Gilman

Yes. An employer may exclude the value of meals and lodging provided in-kind to an employee, but not cash. The value of meals is excludable if the meals are provided on the employer's premises and for its convenience. The value of lodging is excludable if the employee is required to take the lodging as a condition of the job.

As a general rule, cash is always taxable. There is an exception for meal money an employer provides to an employee who must work overtime

While the value of meals can be excluded from an employee's taxable income, the employer's deduction is limited to 50 percent.