Hi, I'm Jeff Lovell, a staff accountant with an accounting firm. Today, we're discussing employee fringe benefits. One of the many advantages of incorporating your business is the ability to provide fringe benefits through services provided by our firm. Fringe benefits are taxable and reported on the employees' W-2 or the contractors' 1099 miscellaneous. However, there are some fringe benefits that are tax-exempt within certain limits. On the screen, you can see some common non-taxable fringe benefits. Today, I will be discussing a handful of these benefits. Firstly, employer-provided meals are not required to be reported as income by employees if they are considered "de minimis" in nature. This includes morning meals like coffee and donuts, meals provided to incentivize employees to work overtime, or food provided at company picnics or parties. These meals must generally be provided on the company's premises, such as in a cafeteria, break room, or at a company event or job site. Meals provided off-site or that are not available to all employees equally are taxable. Next, we have health savings account (HSA) contributions. The amount that a corporation can deduct for contributions made to an employee's HSA varies based on the employee's age and the type of plan they are enrolled in. These contributions are not treated as income to the employee and grow in the account tax-free. The employees can use the funds for qualified medical expenses without paying taxes. Did you know that by incorporating your business and treating yourself as an employee, you can make your cell phone bill fully deductible? However, the majority of cell phone usage must serve a bona fide business purpose, such as communicating with clients or other employees. The cell phone cannot be provided as a form of compensation or as an incentive for accepting a job offer. Lastly, corporations can...
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Are davis bacon fringe benefits taxable Form: What You Should Know
Davis Bacon “prevailing wage”; or they can choose to offer fringe benefits that are subject to payment as cash wages. You may be able to get a small bonus (and possibly more) if you opt for a cash-wage-based fringe benefit plan, depending on what the particular benefit plan offers. It's possible to make a “bonus” if you don't make full up-front payments if you choose an option that is not available under your employer plans, but the bonus payment will be capped at the “prevailing wage” if you choose a cash wage. For example: For your payment rate choice, make sure to choose the same or next highest payment rate based on other wages you receive. If you receive only the minimum wage, choose the next highest payment rate. If you don't make a full-up-front payment, your payment will be based on the prevailing wage determined in your payment rate choice. Your payment rates choice should be based on a plan that allows you to keep up with the prevailing wages in your locality. This could include the federal or state minimum wage and/or the Fair Labor Standards Act's standard wage rules. Paying by cash will not generally give you the protections of the Davis Bacon Act if you pay for other fringe benefits (as you would in an individual health plan). In fact, under the Davis-Bacon Act, if you pay for health benefits as a cash wage, you will be allowed to keep the full benefit you would have received under a cash wage in the Davis-Bacon Act. What happens if my employer doesn't offer fringe benefits to me? You're entitled to a benefit plan that's as good as the benefits of any plan offered by the employer. If the benefit plan offered by your employer doesn't provide the same level of benefit as the benefit plan offered by another eligible employer, the other employer has a duty under the Davis Bacon Act to match the benefit plan offered by your employer. The employer doesn't have to offer the same benefit that you are eligible for, or better benefits. Your job may depend on the work you do, your location, the type and quality of your coverage, and other factors that are specific to your position. For example, a driver for a small and small-sized employer who is in a low-risk occupation may need only to make up to 70% of the maximum payment rate to be eligible for a fringe benefit plan.
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