By Kelli B. Grant
Question: I am going to be the ‘house dad’ for a fraternity at a university where I’ll also be a graduate student. I am supposed to handle basic operations of the chapter house and safeguard property. In return I am given $800 a month and free room and board. Because this is a tax-exempt fraternal organization, what tax liability will I have?
–William Huddleston, Columbia, Mo.
Answer: It’s the fraternity that reaps the advantages of its tax-exempt status, not its employees, says Brian Yacker, a certified public accountant and partner at YH Advisors, a Huntington Beach, Calif., firm that specializes in tax-exempt organizations. Come tax time, you’ll still likely need to file federal and state income tax returns, the same as you would if employed by a for-profit retail store or pizza delivery chain. On the plus side, the value of the room and board isn’t considered taxable, he says, since the job requires you to be on-site.
But you may not need to file at all. For 2011, the IRS requires single taxpayers to file a return only if their gross income exceeds $9,500. The threshold is $5,800 for students whose parents claim them as dependents. If your job is solely for the academic year, you might fall below either threshold in a given tax year. But even if filing isn’t required, it’s still a good idea — you’re probably owed a refund from any taxes withheld and other available credits, Yacker says.