Decreasing Employee Salaries via Benefits
Delivered January 22, 2020. Contributor: Joseph M.
Goals
To find information on the typical practices that tech companies use to financially decrease employee salary via benefits such as company lunches, snacks, travel stipends, etc. The purpose of research is to identify ways to decrease the salary of employees by paying for more with the company so that the company is taxed less.
Early Findings
- The IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits provides guidelines on the fringe benefits that are not taxable.
- Common employee fringe benefits that are not taxable include accident & health benefits, achievement awards, adoption assistance, athletic facilities, de minimis (minimal) benefits, dependent care assistance, educational assistance, employee discounts, employee stock options, employer-provided cell phone, group-term life insurance coverage, health savings accounts (HSA), lodging on your business premises, meals, no-additional-cost services, retirement planning services, qualified transportation (commuting) benefits, tuition reduction, and working condition benefits.
- From the above IRS exclusion list, it can be concluded that qualifying company lunches, snacks, travel stipends, among other benefits are exempted from tax by the IRS.
- Resources that highlight the employee benefits that are not taxable are plenty in the public domain. Articles that discuss this are listed below:
- Employee Fringe Benefits That are Tax Free.
- Employer Guide: What Employee Compensation Is Taxable?
- United States: Taxable And Non‐Taxable Fringe Benefits.
- Top 9 Tax-Free Employee Benefits You Can Offer at Limited Cost.
- The listed resources contain more or less the same non-taxable benefits that have been identified above from the IRS Publication 15-B.
Proposed next steps:
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Preliminary research was able to identify employee benefits that are non-taxable. Consequently, we recommend additional research to identify 2-3 case studies of tech companies that use benefits and how they financially write them off for their taxes. Research will determine whether the companies pay for benefits and classify them as entertainment, fringe benefits, or something else, how the identified tech companies and startups pay for so many benefits and classify them for their tax code, and whether companies provide reimbursements for driving to work i.e. travel stipends, meals, health care, working from home, working from coffee shops etc.
Additionally, we recommend research to identify insights on at least 5 practices that tech companies can use to offer benefits to employees without tax liability.