Tommy, a senior at State College, receives free room and board as full compensation for working as a resident advisor at the university dormitory. The regular housing contract is $2,000 a year in total, $1,200 for lodging and $800 for meals in the dormitory. Tommy had the option of receiving the meals or $800 in cash. Tommy accepted the meals. What must Tommy include in gross income from working as a resident advisor?

Question

Quizplus · Accepted Answer

According to the IRS, compensation received in the form of free housing and meals should be included in gross income unless they qualify for a specific exclusion or exception. Tommy chose to receive the meals instead of the cash, so the value of those meals should be included in his gross income. The lodging may also be included in gross income since it was a form of compensation for services. The fact that Tommy is a senior or that he received free room and board in the form of a scholarship does not change the taxability of this compensation.

Tommy, a Senior at State College, Receives Free Room and Board