Corporate housing has become a staple for businesses in the twenty-first century, and with millions of domestic and international business trips slated for employees each year, those expenses can quickly add up. However, what many companies may not realize is that corporate housing helps employers with their taxes. In other words, a portion of the money spent on corporate lodging may be tax deductible for employers, and that is a savings worth exploring.
Ensuring Corporate Housing Is Tax Deductible for Employers
Not all corporate housing is tax deductible for employers. There are some basic eligibility requirements that must be met in order for an employer to write off temporary housing expenses on business taxes. These requirements include:
- Purpose. An employee’s need for corporate housing must be work-related. In other words, to be valid, any lodging arrangements should be made for a location that is close to the satellite office. If the apartment is too far from the place of business, it could be deemed as a leisure trip rather than for business and therefore would not be tax deductible.
- Distance from home. Corporate housing for an employee that is in the same city as the employee’s tax home is not eligible for business tax deductions. In order for the apartment to be considered valid, the lodging arrangements cannot be for the same city the employee already lives in.
- Length of stay. While corporate housing is known for its flexibility in covering varying lengths of stays, to be approved for business taxes, a stay should last less than one year.
Common Tax Deductible Corporate Housing Expenses
The corporate housing expenses an employer pays must be connected to the employee’s ability to do business to be eligible for a tax deduction. This typically includes costs such as:
- Living expenses. This usually includes the entire cost of living expenses which can be inclusive of utilities.
- Meals. When an employee is away from home, the majority of their meals are eaten out. For this reason, a portion of the cost of these meals may be tax deductible for the business.
- Transportation. Even for corporate lodging that is close to a satellite office, transportation may still be required to get to and from work. An employer may be able to deduct the cost of transportation for that specific purpose.
It is important to note that the way in which these expenses are covered and reported are crucial for their validity. There are significant differences between how taxes are handled when an employer files on behalf of employees and when an employee pays the expenses and is then reimbursed. To deduct corporate housing as a business expense it is recommended for an employer to pay the cost directly rather than reimbursing an employee.
What to Look for in a Corporate Housing Company
The corporate housing industry is vast, but to have it be an unequivocal success for your business it is key to partner with the right provider. Some key considerations to keep in mind before choosing a provider include:
- Property Perks. Choose a company that goes the extra mile to make employees comfortable by offering amenities such as full-sized kitchens, washer and dryer in each apartment, onsite fitness center, a swimming pool and more.
- Experience. Look for a company with a long history of providing lodging for business executives and professionals. The longevity of their business and brand can speak volumes about their ability to serve their clients well.
- Excellent Customer Service. In order to confidently delegate employee lodging responsibilities, it is critical for an employer to select a provider that exhibits excellent customer service to both the businesses and guests that they work with.
Employers have options for their employee’s lodging needs, and while many will choose hotels, it’s important to note that corporate housing stays of more than 30 days are tax free, which is a clear advantage to any business. Since hotel stays of any length will be subject to taxes, consider the tax benefits of working with a reputable corporate housing provider instead.