While most income received from your employer quickly ends up on a W-2 tax form at the end of the year, here are some common employee benefits that often avoid the impact of Federal taxes.
Health benefits. While now reported on W-2’s, employer provided health insurance premiums are currently not required to be reported as additional income by the employee. This includes premiums paid for the employee and qualified family members. In addition, the employee portion of premiums can be paid in pre-tax dollars.
Credit card airline miles. Credit card benefits like miles are not generally deemed as taxable income. So those miles earned on corporate credit cards that go to you as an individual are not likely to increase your tax bill.
Employee tuition reimbursement. Up to $5,250 of tuition reimbursed to you by your employer are not deemed to be additional taxable income.
Commuting expenses. You can generally exclude the value of transportation benefits you receive up to $300 per month for combined commuter highway vehicle transportation and transit passes. There is also up to $300 per month for tax-free qualified parking benefits.
Company Health Savings Account (HSA) contributions. Up to specified dollar limits, cash contributions to the HSA of a qualified individual are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax.
Group term life insurance. You can generally exclude the cost of up to $50,000 of group-term life insurance from your wages.
Small gifts. Small-valued gifts are not included in income and could include things like the use of the company copy machine, occasional meals, reasonably priced holiday gifts and tickets to a sporting event.
Knowing what benefits can avoid a tax bite, try to maximize their use to your greatest advantage and reach out with any questions you may have.
