Under Treasury Regulation Section 1.119-1, all compensation paid to, or on behalf of an employee is subject to Federal, State, FICA, and Medicare withholding.  College provided housing and meals are considered taxable fringe benefits to the individual and, as such, are subject to withholding.  In order to eliminate the confusion associated with taxing a ’non-cash taxable fringe benefit’, a situation that occurs when payment for the benefit (housing, meals, etc.) is made directly to the provider, a pro-rata housing and /or meal allowance should be added to the individual’s gross pay.  Once the applicable taxes have been withheld each pay period, a matching housing and/or meal deduction will remove the funds from the individual’s net pay and credit Residence Life and/or Dining Services.