Pay attention to the fringe benefits you offer
Tax Tip of the Week
June 17, 2013
Pay attention to the fringe benefits you offer
Fringe benefits may be such an established part of your business compensation package that you're fairly casual about them. Nevertheless, it's wise to review your policies periodically to make sure you're correctly classifying the fringe benefits you provide and getting the maximum tax deduction.
For example, say you've been including expenses such as break room coffee and snacks in your "meals and entertainment" general ledger account. The practice could be costing you at year-end. Why?
Generally, only 50% of the cost of meals and entertainment expenses are deductible on your federal income tax return. However, office snacks provided to workers on your business premises qualify for 100% deductibility. Separating the expenses makes it easy to determine the proper tax treatment.
Health insurance premiums may also require separate accounting. For example, when you own more than 2% of the stock of an S corporation, premiums you pay for your policy must be reported on your Form W-2 at year-end as part of your wages.
The health insurance premiums you pay for your employees are generally not included in wages, though they may be reported on Form W-2.
Fringe benefits can be a valuable tax break for your business. To be deductible, they must be an ordinary and necessary business expense and meet certain other requirements.
Give us a call. We'll help you untangle the rules.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
© MC 2013
June 17, 2013
Pay attention to the fringe benefits you offer
Fringe benefits may be such an established part of your business compensation package that you're fairly casual about them. Nevertheless, it's wise to review your policies periodically to make sure you're correctly classifying the fringe benefits you provide and getting the maximum tax deduction.
For example, say you've been including expenses such as break room coffee and snacks in your "meals and entertainment" general ledger account. The practice could be costing you at year-end. Why?
Generally, only 50% of the cost of meals and entertainment expenses are deductible on your federal income tax return. However, office snacks provided to workers on your business premises qualify for 100% deductibility. Separating the expenses makes it easy to determine the proper tax treatment.
Health insurance premiums may also require separate accounting. For example, when you own more than 2% of the stock of an S corporation, premiums you pay for your policy must be reported on your Form W-2 at year-end as part of your wages.
The health insurance premiums you pay for your employees are generally not included in wages, though they may be reported on Form W-2.
Fringe benefits can be a valuable tax break for your business. To be deductible, they must be an ordinary and necessary business expense and meet certain other requirements.
Give us a call. We'll help you untangle the rules.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
© MC 2013
