What are fringe benefits?
Fringe benefits are additional benefits or compensation on top of an employee’s regular salary or wages for work they do. Sometimes known as “perks,” fringe benefits can include a variety of things from employee stock options to company cars. Besides making your employees happy, most fringe benefits are taxable (note, we didn’t say all) and must be included in Forms W-2 and 940
Check out the IRS' Employer's Tax Guide to Fringe Benefits, for more information.
Are fringe benefits taxable?
Yes, all fringe benefits are taxable. The value of a fringe benefit is subject to federal income tax, Social Security tax, Medicare tax, and FUTA, and the value must be included in Boxes 1, 3 and 5 of Form W-2, and on line 3 of Form 940. However, the taxable portion of a fringe benefit may be reduced by the following amounts:
- Any amount that the law excludes from compensation; and
- Any amount that the recipient pays for the benefit.
How are fringe benefits reported to Justworks?
So that we can accurately file your taxes, you need to report the total taxable amount of any fringe benefit you've given to your employees. Please contact your Account Manager or email firstname.lastname@example.org by December 15, 2017 with a list of the employees, the type(s) of fringe benefit(s) they received (e.g., gym membership or gift card), and the total taxable amount of the fringe benefit(s) they received.
What fringe benefits are available through Justworks?
Justworks gives you access to the following fringe benefits (we call them perks) to make available to your employees: Health benefits and accidental benefits (e.g., AD&D), elective deferrals through a 401(k), qualified dependent care, qualified transportation benefits, HSAs, FSAs, employer-provided group term life insurance, Citi Bike memberships, New York Health and Racquet Club memberships, and New York Sports Club memberships.
To the extent Justworks is administering any of the above fringe benefits for your company, we will automatically take care of the reporting for your company and the taxable amount will be included in your company’s employees’ Forms W-2 and your company’s Form 940 at the end of the year.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.