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Tax-Exempt Benefits for Your Employees

Tax-Exempt Benefits for Your EmployeesHere is something you may not know: there are perfectly legal ways to reward your employees without being subject to taxation. These benefits are highly valued by the people working for you so, by granting them, you are on the right path to building a loyal and enthusiastic team. It also gives you the opportunity to attract talented and skilled people who, based on the salary alone, would not be very willing to apply to your job ad.

As your company grows and needs more experienced people, you will find that cash in hand alone is not sufficient to make an offer they cannot resist. People value things which also ensure their future security, such as pensions and health plans. Money comes and goes and is subject to taxation, but certain benefits will prove useful in the long run.

You should always think twice before considering a cash bonus or a salary raise to keep your employees loyal to your business. In the end, you will have to withhold tax for it, or your employees will have to report it in their tax returns. Instead, consider one of these tax-exempt benefits:

1. Relocation Expenses Coverage
If your new hire needs to relocate from a different state or city with their entire family, it is a gesture of courtesy to contribute to their relocation expenses. The conditions for offering this bonus without reporting it in your tax filings as employee income are:
⦁ The workplace must be at least 50 miles away from the employee’s residence;
⦁ The employee must work for you a minimum of 39 weeks out of the first 12 months of employment.

2. Educational Assistance
Helping your employees further their education, stay up to date with the latest developments in their field of expertise and obtain certifications is a top priority for many companies. This helps businesses grow together with their employees, and allow them to retain talents trained and specialized within the company.

Also, you can spend up to $5,250 per employee per year (textbooks, tuition fees, exam fees) which are completely tax exempt, both for the company and for the employee.

3. Company Mobile Phones
While BYOD (bring your own device) has taken off and seems like a good idea, remember that you have limited control over the mobile phones belonging to employees. They could have vulnerable apps installed and expose your private data to the risk of leaking or hacking.

On the other hand, providing your employees with company mobile phones allows you greater control concerning the usage of voice and data plan, as well as the apps installed on them. However, if you allow your employees to use the phones for personal calls and internet browsing, this benefit is exempt from taxation, as long as the primary usage is for business purposes.

4. Group Term Life Insurance
The premiums for life insurance offered to employees, with payable death benefit of $50,000, paid by the company, are exempt from taxation. It is also possible, in certain conditions, to extend this coverage to your employee’s spouse.

5. Achievement Awards
Everyone loves being acknowledged and awarded for their dedication, efforts and achievements. This builds loyalty and keeps your team motivated in the long run. This type of benefit is also tax exempt up to the amount of $1,600 per employee in tangible personal property.

Other types of tax-exempt benefits you could think of are free meals at the office, gym subscriptions and dependent care assistance.


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