What Are Fringe Benefits?
A fringe benefit is also known as an employee benefit. This is basically an added benefit that supplements an employee salary. However, this benefit is not that simple as many may think. It’s not that simple in reality. To be more precise on this, these benefits are usually collected at different perks provided by an employer that is not subject to taxation but certain conditions have to be met. If you are an employee and you happen to receive the fringe benefits, you will have to include them in the fair market value as part of your taxable income for the year and this makes them subject to tax withholding and social security benefits.
You may have friends or relatives that get their education reimbursement from their place of work. They may also drive vehicles, benefit from childcare and assistance reimbursement. These are just but a few examples of fringe benefits. There are also other advanced fringe benefits which can include healthcare plans, paid vacation, employee discounts, cafeteria plans, and group term life coverage among others.
There are times when a company may give several fringe benefits grouped together and this is called fringe benefit package. The more an employee stays in a company as a member of the staff, the better the fringe benefits become. The benefits can also get better with the advancement of skills and knowledge. However, they can increase or decrease with time as the company makes changes such as when firing employees, when another staff is hired and some laid off or when there as a major change in the management of the company. The benefits are supposed to increase wit time although this is very rare. If you want to know more about these benefits, you should check with the rules and regulations governing them at your company.
There are companies where these types of perks and employee benefits have been in existence for a long time such that they are not considered a standard but they are expected. Giving these benefits to the staff is a very good way of getting along socioeconomically. A company may give its staff good sick time, Christmas bonuses, medical coverage and vacation time. But one thing which is a major concern about these benefits is that if they are required by the law or what we may ay prevailing wage, this kind of advantage technically does not qualify to be termed as a fringe benefit. Employees can take standard perks as fringe benefits but this will depend on the location and laws that govern them.
There are some fringe benefits that are exceptionally tax free. Some of them include; no-additional-cost service where an employee is provided with services for a sale to a customer. The employer may also give out qualified employee discount. This is where an employee is allowed to buy property and services from the company at a discounted price. The discount is not more than the percentage profit or it maybe 25% less than offered to ordinary customers.