We’ll start with taxable fringe benefits (the list is much shorter):
- Group-term life insurance over $50,000
- Value of personal use of employer-provided vehicle
- Relocation compensation that exceeds actual expenses
- Frequent-flyer miles that are earned during business use and then converted to cash
Exempt fringe benefits include the following:
- Health insurance (up to certain dollar amounts)
- Health Savings Accounts
- Accident insurance
- Group term life insurance coverage—limits apply based on the policy value
- Qualified employee benefits plans, including profit-sharing plans and stock bonus plans
- Employee stock options
- Education assistance
- Relocation expenses that match the actual expenses
- Achievement awards (that are NOT bonuses)
- Employee discounts on goods or services the employer sells
- De minims low-cost fringe benefits such as low-value birthday or holiday gifts, tickets to events, customary awards like retirement gifts or other special occasion gifts (wedding, baby gifts, coffee, soft drinks, and snacks.)
- Supplemental unemployment benefits
- Cafeteria plans that allow employees to choose among two or more benefits consisting of cash and qualified benefits
The New Tax BillBut, and this is important, the new tax bill limits the tax deductions employers can claim for certain fringe benefits, which may cause employers to rethink what they will offer employees. For instance, the tax bill eliminates the business deduction for parking and qualified public transportation benefits. Employees will, however, be able to pay these expenses with pre-tax income if their employer offers a salary deduction program. The new legislation suspends exclusions for qualified bike-to-work reimbursements starting January 1, 2018, through December 31, 2025. Beginning this year, employers that provide paid family and medical leave will receive a tax credit if at least two weeks of leave is provided, and employees are compensated a minimum of 50% of their regular wages. The tax credit ranges incrementally from 12.5 percent to 25 percent, depending on the percentage of compensation employees receive during their leave. The credit can only be applied toward employees who earn less than $72,000 annually. Fringe benefits do make a difference to employees. According to a 2017 Society for Human Resource Management (SHRM) study, 29 percent of employees surveyed would consider the possibility of taking on a job with a different company if the benefits package was better than what they currently have, and 32 percent would be motivated to stay based on benefits. Fringe benefits are a balancing act. As an employer, you want to offer programs that are attractive to your employees and provide an incentive to keep them from jumping ship as well as entice new talent to come on board. At the same time, it’s important to know how benefits impact your bottom line. Consult with your accountant and then talk to a professional at Journey Employer Solutions. We can help you seamlessly implement programs that make sense for you and your employees.
About Journey Employer Solutions
Service: Journey puts service above all. The belief at Journey is that if you offer a great price and great technology but it’s missing A+ level service, it’s worthless.
Technology: Journey has the advantage of being forward thinking and fast moving. Our decisions are not based on stockholders, but clients who are looking for advanced offerings.
Value: Journey takes a client trusting their team as a crucial part of their business very seriously. We realize cost is an important consideration and set extremely fair pricing.
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