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Valuable Fringe Benefit Options for your Employees

As business owner you can provide some valuable fringe benefits to stay competitive with larger companies. Besides health coverage and retirement plans there are other benefits you can offer to employees. Determine which benefits your employees value, then assess what you can afford to provide. Not only will these benefits increase morale and retention but you can also deduct your costs.

Cell phones: Company-provided cell phones are not taxable to employees as long as you give them for “non-compensatory” reasons. However, they are tax free if, need to contact the employee at all times for work-related issues; you require that the employee be available to speak with clients at times when the employee is away from the office; or employees need to speak with clients located in other time zones at times outside of the employee’s normal work day.

Commuting Assistance: employees cannot deduct the cost of commuting to work. But you can help them with their parking costs; transit passes for buses, subways, and trains; van-pooling; and even with bicycles used for commuting. You can pay their costs up to set dollar limits, which can change annually.

Education Assistance: You can help employees advance their learning and skills by supporting programs. Paying for a particular online course for a worker to learn a new computer skill, for example, is appreciated by the employee and benefits the company through improved worker skills.

Employee Discounts: You can enable employees to buy your company’s goods or services at a reduced price. Their savings (the amount of the employee discount) is not taxable to them.  Keep in mind there are limits fixed by tax law on the amount of discounts you can offer.

Flexible Spending Accounts: You can offer programs that enable employees to pay for certain costs on a pre-tax basis. You don’t have to make any contributions to employees’ accounts; your only outlay is administrative costs. For example Flexible Spending Accounts (FSAs) can be set up to cover medical cost or dependent care expenses.

Providing additional benefits is a good business strategy for recruiting and retaining employees while providing tax breaks for all. In addition to income tax savings, these benefits also save on payroll taxes, including FICA and federal/state unemployment taxes.

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