Okay there guys I want to thank aronia for asking another question on my wall and she really has well three questions here the first question is what is a fringe benefit why do we have fringe benefits tax and who have to pay fringe benefits tax aronia I want you to understand that this is one of the most frustrating pieces of tax law and you might tell me well all tax law is kind of frustrating no this is this is one of the worst alright what is a fringe benefit now you can read the definitions of fringe benefits in your textbook but basically it goes like this whenever you have an employer who pays an employee anything or any benefit or any good thing that flows from the employer to the employee is going to be a benefit it's so wide it includes the desk you see that includes having toilet facilities at work any good thing at all that flows from the employer to the employee whatsoever but it's the negative limbs that take away from this and start to narrow down what the government really meant by a fringe benefit so any wages that flow from the employer to the employee the employees will pay income tax on that so the government doesn't need to chase you there because they've already got you there's also the otherwise deductible rule this basically says that if the employee had to pay for that expense and they would get a deduction for it then it won't be covered by fringe benefits taxes now you can read a lot about the confusing formula and fringe benefits tax is written in such a way that it's just mind-boggling ly frustrating to read but in reality when you do fringe...
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FAQ - Fringe benefit definition
What do you mean fringe benefits?
fringe benefit, any nonwage payment or benefit (e.g., pension plans, profit-sharing programs, vacation pay, and company-paid life, health, and unemployment insurance programs) granted to employees by employers.
Is Fringe the same as benefits?
Fringe benefits are benefits in addition to an employee's wages. So, any monetary benefit an employer offers in exchange for an employee's services that does not include their salary is a fringe benefit.
What is the difference between benefit and fringe benefit?
Traditional Benefits Most employees associate the word "benefits" with paid time off, health insurance and retirement plans such as 401(k)s. The U.S. Department of Labor classifies "fringe benefits" as contributions an employer pays to a third party or trustee for pension, life insurance and health insurance plans.
What are examples of fringe benefits?
Some of the most common examples of fringe benefits are health insurance, workers' compensation, retirement plans, and family and medical leave. Less common fringe benefits might include paid vacation, meal subsidization, commuter benefits, and more.
What are five fringe benefits?
Common fringe benefits are basic items often included in hiring packages. These include health insurance, life insurance, tuition assistance, childcare reimbursement, cafeteria subsidies, below-market loans, employee discounts, employee stock options, and personal use of a company-owned vehicle.
What's another word for fringe benefit?
In this page you can discover 14 synonyms, antonyms, idiomatic expressions, and related words for fringe-benefit, like. gravy, allowances, benefits, bonus, compensation package, employee-benefit, lagniappe, perk, perks, perquisite and perquisites.
Are fringe benefits deducted from paycheck?
Generally, fringe benefits are taxable to the employee, must be included as supplemental income on the employee's W-2, and are subject to withholding and employment taxes. The IRS provides guidance on fringe benefits in a publication titled Employer's Tax Guide to Fringe Benefits For Use in 2021.
What is the meaning of a fringe benefit?
Fringe benefits are compensation that is in addition to direct wages or salaries. They may include a company car, medical insurance, dental and eye insurance, paid holidays, pension plans, a housing allowance or subsidized meals. Certain fringe benefits are considered part of taxable income.
What is an example of a fringe benefit?
Some of the most common examples of fringe benefits are health insurance, workers' compensation, retirement plans, and family and medical leave. Less common fringe benefits might include paid vacation, meal subsidization, commuter benefits, and more.
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