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How to calculate Fringe Benefits Form: What You Should Know
Fringe Benefits in Employee Expenses An employer may pay the least of the employee's benefit or annual salary for each hour worked, provided the employee's benefit is not less than minimum wage for that time period. Fringe Benefits as Deductible Filing When an employer deducts all or part of an employee's fringe benefits from Employee Expenses How to Calculate Fringe Benefits in Employee Expenses Your fringe benefit deduction should be reported as expense income on Form 1040, line 31, because the fringe benefits expense can be offset by additional expenses incurred at the same time. Quick Reference to Standard Wage Rates for Certain Service The wage rate is the average hourly wage for Your Employer Tax (F) or Employer Social Security (F) If the employee's employer provided this benefit, the F is added to the F on line 19, then Fringe Benefits as Deductible (FAD) FAD is the deduction for the fringe benefit only, and is based on the employee's hourly rate only. If the employer paid fringe benefits, the FAD is added to the F on line 19. A positive number means the employer's fringe benefit expense is less than the FAD. A negative number means the fringe benefit expense is more. Example: If your employee earns 10 per hour, and you pay the employee 10 per additional hour worked, the additional rate of 45 per additional hour worked is added to the wages on line 19. You receive FAD, 45 × 30 hours. Example: When you pay 150 per week to an employee with a wage rate of 7 per hour, the employee will be reimbursed a maximum of 150 × 7 hours = 4,300 plus fringe benefits. The other 200 is the deductible fringe benefit for that individual's monthly income deduction of 1,200, which is based on the wage rate of 8 per hour. The tax withheld from the amounts paid by you must be reported on Form 1040, line 39. The amount that you must deduct for F fringe benefit is based on the number of hours the employee performs for you. Example: Here, Employer pays an employee 30 per week and provides the employee with a 10 per hour benefit package.
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