Question

In: Accounting

Discuss three non-taxable fringe benefits that companies offer employees and explain why you feel the IRS...

Discuss three non-taxable fringe benefits that companies offer employees and explain why you feel the IRS choose to make these non-taxable to the employee?

Solutions

Expert Solution

1. Qualified Employee Discounts

  1. Qualified employee discounts are fringe benefits that arise when you give employees (or their spouses and dependent children) a price reduction on property or services that you ordinarily sell to your customers or clients. However, discounts on personal property usually held for investment, such as stocks or bonds, and discounts on real property, such as buildings or land, are not qualified employee discounts.
  2. Working Condition Fringe Benefits

    Job training, educational assistance, meals that are provided for the convenience of the employer, and employer-provided vehicles used for business are among the common working condition fringe benefits for most small businesses. Vehicles that employees are not likely to use more than minimally for personal purposes because of their design (for example, a delivery truck with seating for the driver only, or tractors and other special purpose farm vehicles), also qualify as working condition fringe benefits for employees that use them.

  3. Qualified bicycle commuting reimbursement. Employers may offer employees a qualified bicycle commuting reimbursement of up to $10 for every qualified bicycle commuting month in a calendar year. A qualified bicycle commuting reimbursement is an employer reimbursement during the 10-month period starting with the first day of the calendar year for reasonable expenses incurred by an employee during the calendar year for the purchase of a bicycle and accessories, and the repair and storage of a bicycle that is regularly used to ride to and from work.

    A qualified bicycle commuting month is any month during which an employee regularly uses a bicycle for a substantial portion of travel between the employee's residence and the place of employment and the employee did not receive any other transportation fringe benefit. However, unlike other transportation fringe benefits, bicycle commuting benefits may not be provided pursuant to an elective salary reduction agreement.

    offering fringe benefits that are valuable to employees can improve job satisfaction and help them offer a competitive benefits package.hence IRS choose to make these non-taxable to the employee


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