Fringe benefits are compensations made to an employee beyond the regular benefit of being paid for their work.
Fringe benefits commonly include health insurance, group term life coverage, education reimbursement, childcare and assistance reimbursement, cafeteria plans, sick time, vacation time, employee discounts, tuition assistance, personal use of a company owned vehicle, and other similar benefits.
Key executives in large organizations also might receive fringe benefits such as the use of time-share condominiums, use of a company jet, discounted or free health club memberships, and more.
How To Handle Fringe Benefits On Payroll And Paychecks
Most Fringe Benefits are not subject to income tax because they are either specifically excluded by law, or paid for by the employee. Fringe benefits such as gifts or bonuses, and certain types of retirement and insurance benefits, are considered taxable income, however, and any employee who receives taxable fringe benefits will have to include the fair market value of the benefit in their taxable income for the year, which will be subject to tax withholdings and social security benefits payments.
Many employers customize fringe benefits to specific employees' lifestyles whereby workers can select certain benefits from a cafeteria-style plan. Employees should be aware of what benefits specifically qualify for a fringe benefit tax so they can prepare accordingly.
This 90-minute training session will help you to determine if your fringe benefits are currently being offered to employees correctly in order to ensure that they are compliant with federal and state payroll tax regulations. This may assist you in avoiding a costly audit in the future.
We'll cover the IRS guidelines for the items that they will focus on when an employment tax audit is being performed, as well as tips on how to perform your own internal review to catch anything that may actually cause an audit.
Which benefits are taxable - and how they should be reported
Which benefits are excludable from taxes - and how they should be documented
How to compute the value of a "good" versus a "service" - and how to handle the payroll tax consequences for those items considered taxable
How to perform your own internal review to catch anything that may actually cause an audit
What the IRS guidelines are for an employment tax audit
What to do if you have some items that should have been considered wages subject to payroll taxation