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. Many fringe benefits are taxable (note, we didn’t say all) and, as such must be reported on Forms W-2 and 940.
Check out the IRS' Employer's Tax Guide to Fringe Benefits, for more information.
Are fringe benefits taxable?
Many fringe benefits are considered taxable income, and are therefore subject to federal income tax, Social Security tax, and Medicare tax. The value of many taxable fringe benefits must be reported in Boxes 1, 3 and 5 of Form W-2. Fringe benefits may also be subject to taxation under the Federal Unemployment Tax Act (FUTA) and reported by employers on line 3 of Form 940.
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 use the End of Year form in your End of Year Resource Center to let us know. Common fringe benefits include the exercise of employee stock options, moving expenses, and employer-provided cell phones.
If you’re unsure of whether a particular fringe benefit is considered taxable income, please check with your tax advisor.
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, Town Sports International, 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.