5 Tax-Free Benefits To Improve The Lives Of Your Employees
As an employer, you want to provide benefits that actually benefit your employees. Doing so helps improve their lives and creates happier, more stable employees for you. But how can you choose benefits that can help people get on a better track — financially, emotionally, or physically? And how can you keep them from affecting the taxes of the company or the employee?
Here are five places to focus your money.
1. Educational Reimbursement. The IRS allows employers to reimburse employees up to $5,250 each year for qualified higher education expenses. This can generally include tuition, fees, and textbooks, and it's open to both undergraduate classes and graduate school. Helping your employees get more education results in more loyal, more skilled, and more engaged workers.
2. Dependent Care Expenses. Child care is one of the biggest expenses for many working families. As the employer, you can help share that burden by providing on-site child care or reimbursing up to $5,000 of the employee's expenses. Not only does this help the family's budget, but it can lead to more productivity and stability for those working for you.
3. Company Gym. Encourage employees to improve their health by setting up a gym on your property. Small companies can create a small gym area with a few machines, a yoga studio, and facilities to change. Have more employees? Step up your game by paying instructors to offer classes before or after work and a lunchtime. You can deduct the expense and your employees won't include it in taxable income.
4. Flexible Spending Account. An FSA (also called a cafeteria plan or Section 125 plan) is an account into which you and/or the employee contribute up to $2,650 (in 2018) towards medical and dental expenses throughout the year. You can use this plan, for instance, in conjunction with a health insurance plan that includes a deductible to ensure that employees and their families can still afford to see a doctor. It can also reduce the overall cost of a company health plan by opening up more options.
5. Life Insurance. Employers can provide up to $50,000 worth of group term life insurance with no tax consequences to the employee. Life insurance is an important protection for many, but particularly for those with only one working spouse, with small children, or who provide care for older family members.
As you provide worthwhile benefits and keep everyone's taxes lower, you'll undoubtedly see a happier workforce and tangible improvement in your own company. Contact a tax firm, like Balkcom Pearsall & Parrish CPA's PA, for more help.
