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Do I owe tax on my benefits at work?

Ever wonder if the benefits you receive at work are taxable?  A fringe benefit is a form of pay in addition to your salary or hourly wage.  Fringe benefits include cash, services, property or compensation equivalent to cash.  For tax purposes, there are four classifications of fringe benefits:

                Taxable: All benefits are considered taxable unless otherwise excluded by the tax code.  If a benefit is taxable then it must be included in gross wages on your W-2 and is subject to income tax.

                Nontaxable: These are benefits specifically excluded by the tax code.  For example, the IRS just declared that employer provided cell phones are a nontaxable fringe benefit.

                Partially Taxable: This applies to benefits that are specifically excluded to a limit.  This would include benefits that have dollar value ceilings of exclusion.

                Tax-deferred: Tax-deferred benefits are those that are not taxable when awarded but will be taxable in the future. An example would be employer contributions to pension plans.

For information regarding whether your fringe benefit is taxable, see the Taxable Fringe Benefit Guide  written by the IRS or contact your tax professional.

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