There are a lot of fantastic fringe benefits being offered to employees in 2020. However, it is important for companies to remember that many of these benefits are taxable, which means that they are going to be subjected to withholding and employment taxes.
If you would rather prevent taxes from piling up, then you need to be aware of what fringe benefits are non-taxable. Here are some of the best ones for companies to offer and employees to take advantage of.
On-Site Gym Facilities
Although there aren't a ton of companies able to offer this fringe benefit, if it is feasible, an on-site gym is a fantastic amenity to offer employees. If you provide them with some sort of athletic facility then it should be located on property that your company owns or leases. It should be operated exclusively to serve the needs of the company's past and present employees. By doing these things, it becomes free of income tax withholding for all current and former employees, as well as their partners.
Outstanding Achievement Awards
Having an established system of recognizing employees for their hard work is something that will benefit any workplace. After all, when people feel more valued, they are going to work much harder. Companies should strongly consider offering some sort of achievement awards to employees if they want to improve their culture, employee moral, and overall efficiency.
Even better, providing rewards to distinguished employees can be non-taxable, as long as you meet a certain set of requirements. To ensure the awards don’t get taxed, remember that it cannot be a cash prize, nor any intangible property such as lodging, vacations, tickets, meals, securities, or stocks. The other major qualification is that the total value of the awards given must be under $1,600 each year.
Although employee discounts often go unused, if done correctly they can be very motivating for employees and non-taxable for employers. For this reason, it’s important to ensure that the specific products or services they are eligible to receive discounts on are ones that employees want. Additionally, employee discounts are non-taxable, as long as the employee discount does not discriminate for highly compensated employees. It also cannot be more than a 20 percent reduction in the normal price of the product.
De Minimis Meals
This is one of the most common fringe benefits offered to employees since it requires very little effort on for the company, yet can leave a large positive effect on the employees. De Minimis Meals are food or drink items that are so inconsequential that no company could be reasonably expected to report on them. This typically includes providing things like free coffee, soft drinks, donuts, or any other minor snack items for the employees to enjoy.
Many of these benefits and perks are very low cost and low friction to implement. Since they can boost employee morale and are also non-taxable, doing a few of these can provide an immense benefit to your organization: they are effectively a win-win. You can reward your employees for all their hard work and it doesn’t cost your company more during tax season.
If you do decide to implement these policies, it is a great idea to have a company communications platform to keep all your employees in the know. To learn more about the best ways to communicate these and other benefits, contact us today.