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Domestic Corporate Taxation

Corporate Employee: Housing

Employees can be reimbursed directly or indirectly (which includes services provided in kind) for moving expenses. Deductible moving expenses only include the reasonable expenses of moving household goods and personal effects and traveling (including lodging) from the former home to the new home.

Employees can be given lodging by an employer if it is provided on the business premises, if it is provided for the employer's convenience and if the employee accepts it as a condition of employment.

In July 2004, the American Institute of Certified Public Accountants (AICPA) urged Congress to reject a proposal contained in Senate tax legislation which aimed to restrict employer-provided housing benefit for workers based overseas. In a letter to House and Senate tax writers, the AICPA argued that the measure, which was included in the Senate ‘JOBS’ bill, "will reverse long-standing tax policy and result in the loss of American jobs and exports".

Overseas workers had been permitted to exclude up to $80,000 from American income taxes, and where employers pay for housing costs, individuals can exclude costs that are not considered to be “lavish or extravagant”.

However, under proposals advanced by Sen. Mary Landrieu (D-LA), the employer-paid housing costs would have been included in the $80,000 limit as part of a plan intended to help firms who continue to pay the salaries of National Guard and Reservists on active duty.

The AICPA expressed concern that if the proposal became law, it would lead to many foreign-based American workers losing their jobs, as firms would hire foreign employees in their place. The Institute was therefore delighted to learn that the provision did not pass with the rest of the JOBS Act. For 2012, housing costs are based on location up to a maximum of $128,000.

For 2012, the maximum foreign earned income exclusion is $95,100 per qualifying person; for 2013 it is $97,600.

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U.S. Tax Treaty Developments

Treaty Update: United States - Cayman Islands
09 April, 2014
A new tax information exchange agreement between the Cayman Islands and the United States will enter into force on April 14, 2014.
Treaty Update: Hong Kong - United States
31 March, 2014
Hong Kong and the United States signed a tax information exchange agreement on March 25, 2014.
Treaty Update: United States - Various
03 March, 2014
The US Senate Committee on Foreign Relations held talks on February 26, 2014, on the DTA Protocols between the United States and Switzerland and Luxembourg, and DTAs with Hungary and Chile, as part of the nation's domestic ratification procedure.
Treaty Update: Mauritius - United States
15 January, 2014
Mauritius and the United States signed a TIEA and an inter-governmental agreement on December 27, 2013.
Treaty Update: United States - Vietnam
18 November, 2013
During a meeting on November 14, 2013, Vietnamese Prime Minister Nguyen Tan Dung called for negotiations towards a DTA with the United States to be concluded in earnest.
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