If your employer provides you a service as a perk, is the service value taxable?

[TechBoyJK]

I work at a hosting company, and I'm going to get some free server hosting as a perk. It's about $300 a month worth of services. Do I need to claim that as income? They are basically saying I can host a few servers for free, so it's not listed as an official perk of my job opportunity. However, they are saying that if I didn't want it, they'd paid me $150 more per month.

 

[Farmer]

Is this being reported on your W2? I don't see how it could be. I don't think it's taxable.

 

[ElFenix]

iirc, any benefits provided to you that are not for the benefit of the employer (the difference between taking you out to lunch as a friendly thing and ordering pizza for a required staff meeting), are income.

 

[SandEagle]

take the 150/mo

 

[swanysto]

They cannot tax that "perk", however, that $150 is taxable. Depending on the tax bracket you are in, you are looking at losing about 25% of that. So I would take the domain space if you are going to get use out of it.

 

[CPA]

They cannot tax that "perk", however, that $150 is taxable. Depending on the tax bracket you are in, you are looking at losing about 25% of that. So I would take the domain space if you are going to get use out of it.

What do you mean they cannot tax that perk? Fringe benefits are taxable. this sounds like a fringe benefit.

Auto allowance, club memberships, and this, company paid hosting services could be taxable to the employee.

That said, you may be able to get away with the No-Additional-Cost exclusion:

A service provided to employees that does not impose any substantial additional cost may be
excludable as a no-additional-cost fringe benefit. A “no-additional-cost service” is a service
offered by the employer to its customers in the ordinary course of the line of business of the
employer in which the employee performs substantial services, and the employer incurs no
substantial additional cost (including foregone revenue) in providing the service to the
employee. IRC 132(b)

However, if your company provides this service to its customers, it could be taxable to you:

6 Qualified Employee Discounts
A qualified employee discount allows an employee to obtain property or services from the
employer at a price below that available to the general public. For example, many public
municipalities have park districts that offer a variety of amenities to the public such as
swimming pools, fitness and weight room facilities, and golf courses. In some cases,
employees may be able to purchase goods or services from the employer at a lower price than
the property or service is offered to the general public. When these amenities are offered to
the public for a fee and the same amenities are offered to an employee at no cost, the
possibility of a taxable benefit to the employee exists. However, the benefit is excludable if it
is a qualified employee discount.

De minimis benefits are generally not taxable, but I don't consider this De minimis. Per the IRS:

De minimis fringe benefits include property or services, provided by an employer for an
employee, with a value so small that accounting for it is unreasonable or administratively
impractical. The value of the benefit is determined by the frequency it is provided to each
individual employee, or, if this is not administratively practical, by the frequency provided by
that employer to the workforce as a whole. IRC §132(e); Reg. §1.132-6(b)
Example: An employer gives employees snacks each day valued at one dollar. Even though
small in amount, the benefit is provided on a regular basis and is, therefore, taxable as wages.