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What Fringe Benefits Am I Paying Taxes On? 
by kmhagen July 22, 2005

Financial Counseling Fees

Financial counseling fees paid for you by your employer are included in your taxable income. But you may be able to deduct these expenses on Schedule A as a miscellaneous itemized deduction.

Employer-Provided Vehicles

Personal use of an employer-provided vehicle is a taxable non-cash fringe benefit. Your employer must determine the amount to be included in your income as reported on your W-2. This would generally be the fair market value, which would be the amount you would have to pay a third party to lease the same or a similar vehicle on the same or comparable terms in the geographic area where you use the vehicle.

If you use the vehicle for both personal and business use, you may be able to take an itemized deduction for the business use of the vehicle.

Meals and Lodging

The value of meals and lodging provided to you and your family by your employer are not included in your taxable income if:

  • The meals and lodging are furnished on your employer’s business premises,
  • The meals and lodging are furnished for the convenience of your employer, and
  • The lodging is a condition of your employment.

This exclusion also applies to de minimis meals, or meal money that has so little value that accounting for them would be unreasonable or impracticable. This includes items such as coffee, doughnuts, soft drinks, occasional meals or meal money for working overtime, and occasional company parties or picnics for employees and their guests.

Company-provided eating facilities are also excluded from income if the annual revenue of the facility equals or exceeds the direct cost of operating the facility. Meals provided at a company facility for highly compensated employees, that are not available to all employees or to a group of employees that does not favor highly compensated employees, are not excludible.

Whether meals are provided for the convenience of the employer depends on the circumstances. There must be a substantial business reason for providing the meals. For this purpose, if more than half of the employees are provided with meals for the convenience of the employer, it is considered that all employees are provided meals for the employer’s convenience, and they are excludible from the employees’ taxable income.

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