- Employer
dependent care benefits allow you to exclude up to $5,000 in childcare
expenses from your wages.
- Employer
health care plans allow you to exclude the cost of insurance for you and
your family from your wages.
- Employer
401(k) plans allow you to set aside $17,500 ($23,000 if you are 50 years
or over) per year, tax deferred for your retirement.
- Employer
flexible spending arrangements allow you to pay up to $2,500 of medical and
dental expenses with pre-tax dollars.
- Employer’s
education assistance plans allow the employer to reimburse you by up to
$5,250 tax-free for education expenses.
- Employer
stock purchase or option plans allow you to acquire the employer’s stock
at favorable prices.
- Employers
can provide certain transportation, commuting, and parking costs free of
tax.
Employers
have the option of providing a number of tax-advantaged benefits to their
employees. The following is a rundown of those benefits. You may wish to check
with your employer to see if the company provides any that interest you. Generally,
larger employers provide these benefits.
- Dependent Care Benefits—If you incur childcare expenses so that you can work, you
should check to see if your employer has a dependent care program. If
dependent care benefits are provided by your employer under a qualified
plan, you may be able to exclude up to $5,000 ($2,500 if Married Filing
Separately) of child care expenses from your wages, which generally
provides a greater tax benefit than the child care credit.
- Health Care Insurance—Many employers offer income-excludable
group medical and even dental plans. Generally, everyone, under the
Patient Protection Act, will be required to have basic affordable health
insurance in 2014 or face penalties on their tax return. If you are
currently uninsured, utilizing your employer’s plan may be your best
option to avoid a penalty.
- Adult Children’s Health Care Insurance—Employers are
allowed, but not required, to provide insurance coverage for your children
under the age of 27. If allowed under your employer’s plan, enrolling your
young adult children in your employer’s medical insurance is an option to
get them covered, and at the same time, avoid their penalties for being
uninsured in 2014.
- 401(k) or Similar Retirement Plans—If your employer has a 401(k) plan, you can elect to
defer (pre-tax) a maximum of $17,500 for 2013. If you are 50 years or
older, the maximum is increased to $23,000. These plans are especially
beneficial when the employer provides a matching contribution.
- Flexible Spending Accounts—Some employers provide flexible spending accounts,
which allow an employee to make contributions on a pre-tax salary
reduction basis to provide coverage for up to $2,500 of medical and dental
expenses. However, the participant must use the contributed amounts for
qualified expenses, or else forfeit any amounts remaining in the account
at the end of the plan year. Medical expenses paid for or reimbursed
through pre-tax plans cannot be deducted as part of itemized deductions on
your tax return.
- Educational Assistance Programs—An educational assistance program provided by your
employer can provide up to $5,250 per year of educational assistance
benefits that can be excluded from your income. If you have been thinking
about continuing your education and your employer offers an educational
assistance program, taking advantage of it is a great way to make going
back to school more affordable.
- Stock Purchase and Option Plans—A variety of plans available to employers are designed
to allow the employees to invest in the employer’s stock at favorable
prices. The most commonly encountered are:
(1) Employee stock ownership plan (ESOP);
(2) Nonqualified stock option; and
(3) Incentive Stock Options (ISOs). Note: Because of the tax
ramifications, it may be prudent for you to consult with this office prior to
exercising a stock option, especially an ISO.
- Tax-Free (income excludable) Employee Fringe Benefits—If the employer provides them, the law allows an
exclusion from the employee’s taxable income for the following benefits:
(1) The cost of up to $50,000 of group-term life insurance.
(2) $245 (in 2013) per month for qualified parking.
(3) $245 (in 2013) per month for transit passes and commuter
transportation.
(4) $20 per month for bicycle commuting expenses.
If you have any questions related to these
employer-provided benefits, please give our office a call.
(601)649-5207
(601)649-5207
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