fringe benefits
TRANSCRIPT
Fringe benefits: concept and Fringe benefits: concept and tax consequencestax consequences
Gulbanu DuisenbekovaGulbanu Duisenbekova
Aigul Kalikhanova Aigul Kalikhanova
A fringe benefit is a form of pay (including property, services, cash or
cash equivalent) in addition to stated pay for the
performance of services.
Fringe benefit examplesFringe benefit examples
an employer-provided an employer-provided vehiclevehicle
group health group health insurance insurance
Employee discounts Employee discounts
Why do employers offer fringe Why do employers offer fringe benefits?benefits?
Group health plansGroup health plans
Employee receiving Employee receiving benefitsbenefits
Fringe benefits could be :Fringe benefits could be :
TaxableTaxable
Nontaxable (excludable)Nontaxable (excludable)
Partially taxable Partially taxable
Tax-deferredTax-deferred
Classification of fringe benefitsClassification of fringe benefits
For Employment Security For Employment Security
For Health ProtectionFor Health Protection
For Old Age and RetirementFor Old Age and Retirement
For Personnel Identification, Participation For Personnel Identification, Participation and Stimulationand Stimulation
Fringe benefits are categorized Fringe benefits are categorized asas
Payment for Time Not workedPayment for Time Not worked
Extra Pay for time WorkedExtra Pay for time Worked
CalculationCalculation
Calculating fringe benefit taxCalculating fringe benefit tax
- Single rate (formerly Flat Rate)- Single rate (formerly Flat Rate)
- Alternate rate (formerly multi-rate ) - Alternate rate (formerly multi-rate )
- Rates of fringe benefit tax - Rates of fringe benefit tax
ReportReportinging of of Taxable Fringe Taxable Fringe Benefits Benefits
Fringe benefits>$ Fringe benefits>$ 20002000
Reportable fringe Reportable fringe benefitsbenefits
Included on employees Included on employees payment summarypayment summary
Shown on employees Shown on employees tax returntax return
Tax consequencesTax consequences
RetirementRetirement
Employee’s compensation employees’ taxable Employee’s compensation employees’ taxable income income
Group term life insuranceGroup term life insurance
Provided by employersProvided by employers
Additional taxes Additional taxes deducted from deducted from employee’s employee’s paychecks =>paychecks =>
Additional incomeAdditional income
Tax consequences in Business Tax consequences in Business
Unsubstantiated Business ExpensesUnsubstantiated Business Expenses
Reimbursement may have unexpected tax Reimbursement may have unexpected tax consequencesconsequences..Moving Expense ReimbursementMoving Expense Reimbursement
expenses may be deductible yet excluded from expenses may be deductible yet excluded from wages in certain situationswages in certain situations
E.g: E.g:
-Employer consequences: The moving expenses -Employer consequences: The moving expenses are deductible and are not treated as wages.are deductible and are not treated as wages.
- - Employee consequences: The moving Employee consequences: The moving expense reimbursement is nontaxable but the expense reimbursement is nontaxable but the moving expenses are not deductible.moving expenses are not deductible.
References References
Leibowitz A., (1983), Leibowitz A., (1983), Fringe Benefits in Employee Fringe Benefits in Employee CompensationCompensation. from . from http://www.nber.org/chapters/c7385.pdfhttp://www.nber.org/chapters/c7385.pdf
MONEY MANAGEMENTMONEY MANAGEMENT (2003), from (2003), from http://www.lifetimefp.net/Advice110301.htmhttp://www.lifetimefp.net/Advice110301.htm
Robert W Robert W DitmerDitmer (January, 2010), (January, 2010),Taxation of Group Taxation of Group Term Life Insurance. From Term Life Insurance. From http://suite101.com/article/taxation-of-group-term-lifhttp://suite101.com/article/taxation-of-group-term-life-insurance-a188109e-insurance-a188109
Taxable Fringe Benefit Guide (January, 2012), fromTaxable Fringe Benefit Guide (January, 2012), from http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.phttp://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdfdf
Leibowitz A., (1983), Leibowitz A., (1983), Fringe Benefits in Employee Fringe Benefits in Employee CompensationCompensation. from . from http://www.nber.org/chapters/c7385.pdfhttp://www.nber.org/chapters/c7385.pdf
MONEY MANAGEMENTMONEY MANAGEMENT (2003), from (2003), from http://www.lifetimefp.net/Advice110301.htmhttp://www.lifetimefp.net/Advice110301.htm
Robert W Robert W DitmerDitmer (January, 2010), (January, 2010),Taxation of Group Taxation of Group Term Life Insurance. From Term Life Insurance. From http://suite101.com/article/taxation-of-group-term-lifhttp://suite101.com/article/taxation-of-group-term-life-insurance-a188109e-insurance-a188109
Taxable Fringe Benefit Guide (January, 2012), fromTaxable Fringe Benefit Guide (January, 2012), from http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.phttp://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdfdf
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