1. Fringe benefits: concept and
tax consequences
Gulbanu Duisenbekova
Aigul Kalikhanova

2. A fringe benefit is a form of pay
(including property, services, cash or
cash equivalent) in
addition to stated pay for the
performance of services.

3. Fringe benefit examples
an employer-provided
vehicle
group health
insurance
Employee discounts

4. Why do employers offer fringe
benefits?
Group health plans
Employee receiving
benefits

5. Fringe benefits could be :
Taxable
Nontaxable (excludable)
Partially taxable
Tax-deferred

6. Classification of fringe benefits
For Employment Security
For Health Protection
For Old Age and Retirement
For Personnel Identification, Participation
and Stimulation

7. Fringe benefits are categorized
as
Payment for Time Not worked
Extra Pay for time Worked

8. Calculation
Calculating fringe benefit tax
- Single rate (formerly Flat Rate)
- Alternate rate (formerly multi-rate )
- Rates of fringe benefit tax

9. Reporting of Taxable Fringe
Benefits
Fringe benefits>$
2000
Reportable fringe
benefits
Included on employees
payment summary
Shown on employees
tax return

10. Tax consequences
Retirement
Employee’s compensation employees’ taxable
income

11. Group term life insurance
Provided by employers
Additional taxes
deducted from
employee’s
paychecks =>
Additional income

12. Tax consequences in Business
Unsubstantiated Business Expenses
Reimbursement may have unexpected tax
consequences.
Moving Expense Reimbursement
expenses may be deductible yet excluded from
wages in certain situations

13. E.g:
-Employer consequences: The moving expenses
are deductible and are not treated as wages.
- Employee consequences: The moving
expense reimbursement is nontaxable but the
moving expenses are not deductible.

14. References
LeibowitzA., (1983), Fringe Benefits in in Employee
Leibowitz A., (1983), Fringe Benefits Employee
Compensation. .from
Compensation from
http://www.nber.org/chapters/c7385.pdf
http://www.nber.org/chapters/c7385.pdf
MONEY MANAGEMENT (2003), from
MONEY MANAGEMENT (2003), from
http://www.lifetimefp.net/Advice110301.htm
http://www.lifetimefp.net/Advice110301.htm
Robert W Ditmer (January, 2010),Taxation of of Group
Robert W Ditmer (January, 2010),Taxation Group Term
Life Insurance. From http://suite101.com/article/taxation-
Term Life Insurance. From
of-group-term-life-insurance-a188109
http://suite101.com/article/taxation-of-group-term-
Taxable Fringe Benefit Guide (January, 2012), from
life-insurance-a188109
Taxable Fringe Benefit Guide (January, 2012), from
http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf
http://www.irs.gov/pub/irs-
tege/fringe_benefit_fslg.pdf

15. Questions