Are You Handling Fringe Benefits Correctly?
This week is National Payroll Week, which is the perfect time to review your payroll processes. A commonly asked question we get is, “What is considered a fringe benefit?” Here is our response…
A fringe benefit is a form of pay for the performance of services. For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. However, a person who performs services for you does not have to be your employee; they can be a contractor, partner or director, or could even be a member of an employee’s family. Unless the law specifically excludes it, fringe benefits are taxable and must be included in the recipient’s pay. If the recipient of a taxable fringe benefit is your employee, the benefit is generally subject to employment taxes and must be reported on Form W-2.
Download Rules for Various Types of Fringe Benefits here.
