Scott Gottlieb, CPA

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August 1999

Editor: Scott Gottlieb, CPA
Assistant editor: Susan A. Maffetone, CPA

This month I am going to give a quick run down on fringe-benefits. Please contact our office or your own financial advisor to find out if these ideas can work for you.

Assume your firm has a vacation resort that you can use free of charge. If the value is set at $1,000 for your two-week stay, for example, an extra $1,000 will show up on the W-2 form for the year and you must pay tax on the extra "income.'' For someone in the 31% tax bracket, the tax cost of the vacation would be $310 (31% of $1,000).

If you had to pay the $1,000 out of pocket, it would really cost you more because you'd be spending after-tax dollars. In the 31% bracket you must earn $1,450 to have $1,000 left after the IRS gets its share.

Let's say your company has a plan that permits you to move $300 a month into an account that will be used to reimburse you for $3,600 you have to pay for child-care expenses. It would take $5,000 of taxable earnings, in the 28% bracket, to have the $3,600 after taxes you need to pay for child care.

Look into the following plans with your employer:

Cafeteria Plans

Child Care

Company-Provided Car

Educational Assistance Programs

Employee Discounts

Employee Stock-Purchase Plans

Employer Provided Travel

Free Parking

For 1998 and 1999, if the value of parking is over $175 a month, the excess is considered taxable income.

Group Term Life Insurance Incentive Stock Options (ISOs)

ISOs offer the opportunity to buy company stock at a set price over a period of time as long as a decade.

Loans From Retirement Plans

You may be able to tap a retirement plan without triggering a tax bill by borrowing from the plan.

Meals and Lodging

Medical and Dental

Insurance premiums paid by your employer for you and your family are tax-free.

Outplacement Services

Retirement Plans

Stock Bonuses and Bargain Purchases it Passes

Employees can get up to $65 a month tax-free to cover the cost of getting to and from work via public transit.

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The materials on this Web site are for informational purposes only and are not intended and should not be construed as accounting advice. This information is not intended to create, and receipt of it does not constitute, a CPA-Client relationship. You should not act upon this information without seeking counsel from a Certified Public Accountant