Fringe benefits are extra compensation employers may offer beyond regular wages. These benefits are generally not included directly in an employee’s payroll as they are not usually paid directly to the employee and sometimes may be harder to quantify. However, according to the IRS, most fringe benefits are taxable and must be reported on your tax documents.
Many companies offer fringe benefits as a way to attract and retain employees. However, what is a taxable fringe benefit and what is a nontaxable fringe benefit can be difficult to determine. Taxable fringe benefits include company vehicles, moving expenses, housing allowances and group term life insurance (over $50,000). Nontaxable fringe benefits may include health insurance, concert or athletic tickets, on premises meals, on property gym, educational assistance and disability insurance.
The above information is to be taken as general guidelines and not official tax advice, as each situation needs to be reviewed individually to ensure it is compliant with the tax code. We recommend hiring a professional accounting firm to ensure all fringe benefits are taxed properly. Contact our team at Perfect Balance Accounting to address any questions or concerns that you might have.