Tax Tip: Are Fringe Benefits Deductible?
March 12 -- You change jobs and have built up leave time at your old job. They pay you in cash. That's one fringe benefit you pay taxes on. Or if you have personal use of a company car, you pay tax on that, too.
But some fringe benefits are tax-free, like if your employer pays all or part of your medical insurance, or participates in a flexible spending account for medical or child-care expenses. Some benefits are tax-free up to a limit.
"For example, the group term life insurance policy is a $50,000 benefit. You pay tax on the amount above that," says Don Roberts of the Internal Revenue Service. "Educational assistance that an employer provides. Up to $5,250 is tax free. Anything above that would be taxable. A thing that's certainly popular with a lot of people in urban areas, commuter vehicle or transit passes, up to $100 a month is now tax-free."
Roberts says your employer may legally provide more than the tax-free limit, but then you are responsible to pay tax on the excess amount.
Related Stories
ABC News Live