The fair value of lodging cannot be excluded from gross income unless the employee is required to accept the lodging as a condition of employment.

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According to the IRS, the fair value of lodging provided to an employee is generally considered taxable income, except in cases where the employee is required to accept the lodging as a condition of employment (e.g. a live-in nanny, groundskeeper, or night watchman). In such cases, the value of the lodging can be excluded from the employee's gross income.

The Fair Value of Lodging Cannot Be Excluded from Gross