NEWS
BYTES
August 1999
Editor:
Scott Gottlieb, CPA
Assistant editor: Susan A. Maffetone, CPA
This
month I am going to give a quick run down on fringe-benefits.
Please contact our office or your own financial advisor to find
out if these ideas can work for you.
Assume
your firm has a vacation resort that you can use free of charge.
If the value is set at $1,000 for your two-week stay, for example,
an extra $1,000 will show up on the W-2 form for the year and
you must pay tax on the extra "income.'' For someone in the
31% tax bracket, the tax cost of the vacation would be $310
(31% of $1,000).
If you had to pay the $1,000 out of pocket, it would really
cost you more because you'd be spending after-tax dollars. In
the 31% bracket you must earn $1,450 to have $1,000 left after
the IRS gets its share.
Let's
say your company has a plan that permits you to move $300 a
month into an account that will be used to reimburse you for
$3,600 you have to pay for child-care expenses. It would take
$5,000 of taxable earnings, in the 28% bracket, to have the
$3,600 after taxes you need to pay for child care.
Look
into the following plans with your employer:
Cafeteria
Plans
Child
Care
Company-Provided
Car
Educational
Assistance Programs
Employee
Discounts
Employee
Stock-Purchase Plans
Employer
Provided Travel
Free
Parking
For 1998 and 1999, if the value of parking is over $175 a month,
the excess is considered taxable income.
Group
Term Life Insurance Incentive Stock Options (ISOs)
ISOs
offer the opportunity to buy company stock at a set price over
a period of time as long as a decade.
Loans
From Retirement Plans
You
may be able to tap a retirement plan without triggering a tax
bill by borrowing from the plan.
Meals
and Lodging
Medical
and Dental
Insurance
premiums paid by your employer for you and your family are tax-free.
Outplacement
Services
Retirement
Plans
Stock
Bonuses and Bargain Purchases it Passes
Employees
can get up to $65 a month tax-free to cover the cost of getting
to and from work via public transit.
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Other
issues of NewsBytes see our archives
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