Employee fringe benefits

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Employee fringe benefits

Published about about 2 years ago

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Creating a competitive employee benefits package can be a daunting task. Healthcare costs are rising and it’s becoming increasingly difficult to attract top talent on a medical insurance offering alone. In an effort to increase job satisfaction, many employers and HR directors are turning to fringe benefits to beef up an employee’s total compensation­. What is a fringe benefit? A fringe benefit is generally a form of non-cash compensation paid to an employee. The term was derived during World War II, when government-mandated wage increases were prohibited in many industries. Employers began relying on fringe benefits to attract and reward employees. Examples of fringe benefits include: company parties or trips vacation pay employee discounts use of company machinery tickets to sporting events transportation fare educational assistance. Why would an employer provide fringe benefits? Great employees are hard to find and retaining these workers is even more challenging. However, as health insurance prices increase, many employers have needed to shift a lot of the brunt of healthcare costs to their employees, leaving them without the competitive benefits package that can help instill loyalty in desired talent. Many employers are looking to fringe benefits in order to appeal to employees while still offsetting their healthcare costs. Does the IRS tax fringe benefits? Fringe benefits provided to employees are taxable unless there is a specifically applicable income tax exclusion. Some benefits can be categorized as de minimis fringe benefits, which means they are a property or service of so little value it is impractical to account for the benefit. Examples of de minimis benefits would be: occasional meals company parties non-cash holiday gifts. With some exceptions, other tax-free fringe benefits can include: accident insurance stock options Health Savings Accounts moving expenses educational assistance. More information about tax requirements and exclusions is provided here on the IRS website. Want to know more? Read up on fringe benefits and other aspects of employee benefits law in Employee Benefits ­– An Employer’s Guide.