02/03/2025
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As an employer, you've probably heard about benefits, but let's talk about something specific: tax-free fringe benefits. These are perks you can offer to your employees that don't get taxed like regular income. And guess what? They can be a game-changer in attracting and keeping great talent in your dental practice. Plus, here's a bonus: ๐ฒ๐จ๐ฎ ๐๐๐ง ๐๐๐๐ฎ๐๐ญ ๐ญ๐ก๐๐ฌ๐ ๐๐ฑ๐ฉ๐๐ง๐ฌ๐๐ฌ, and your employees (including you, the boss) don't pay tax on them!โฃ
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So, what are these tax-free goodies?โฃ
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๐. ๐๐๐๐ฅ๐ญ๐ก ๐๐๐ง๐๐๐ข๐ญ๐ฌ: This one's crucial. You can offer health, dental, and vision insurance, and even help with uninsured health-related costs without your employees paying taxes on these benefits.โฃ
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๐. ๐๐จ๐ง๐ -๐ญ๐๐ซ๐ฆ ๐๐๐ซ๐ ๐๐ง๐ฌ๐ฎ๐ซ๐๐ง๐๐: Covers nursing home costs, and the premiums you pay aren't taxable. However, there are limits on the benefits received.โฃ
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๐. ๐๐ซ๐จ๐ฎ๐ฉ ๐๐๐ซ๐ฆ ๐๐ข๐๐ ๐๐ง๐ฌ๐ฎ๐ซ๐๐ง๐๐: You can provide up to $50,000 in life insurance per employee tax-free. If it's more, the excess is taxed at a favorable rate.โฃ
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๐. ๐๐ข๐ฌ๐๐๐ข๐ฅ๐ข๐ญ๐ฒ ๐๐ง๐ฌ๐ฎ๐ซ๐๐ง๐๐: If you pay disability insurance premiums for an employee (and they are the beneficiary), these premiums aren't counted as their income. However, the employee must pay income tax on any disability benefits received under the policy. Exception: disability payments for severe injuries or loss of limbs are tax-free.โฃ
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๐. ๐๐๐ฎ๐๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐๐ฌ๐ฌ๐ข๐ฌ๐ญ๐๐ง๐๐: You can pay up to $5,250 yearly for your employees' education-related expenses, such as tuition, fees, and books, tax-free. (As a side note: this can include members of your family! We will cover more on this on the next few weeks).โฃ
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๐. ๐๐๐ฉ๐๐ง๐๐๐ง๐ญ ๐๐๐ซ๐ ๐๐ฌ๐ฌ๐ข๐ฌ๐ญ๐๐ง๐๐: Up to $5,000 can be given tax-free for dependent care, like child daycare expenses. But remember, you can't claim both this benefit and a tax credit for the same expenses.โฃ
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๐. ๐๐ซ๐๐ง๐ฌ๐ฉ๐จ๐ซ๐ญ๐๐ญ๐ข๐จ๐ง ๐๐๐ง๐๐๐ข๐ญ๐ฌ: You can cover up to $270 monthly for employee parking, or $255 for vanpool or mass transit passes, tax-free. Although such benefits remain tax free to the employees, as a result of the Tax Cuts and Jobs Act ("TCJA"), employers are not allowed to deduct the cost during 2018 through 2025. โฃ
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๐. ๐ช๐จ๐ซ๐ค๐ข๐ง๐ ๐๐จ๐ง๐๐ข๐ญ๐ข๐จ๐ง ๐
๐ซ๐ข๐ง๐ ๐ ๐๐๐ง๐๐๐ข๐ญ๐ฌ: Working condition fringes are anything your employer provides or pays for that you need to do your jobโfor example, local and long distance travel for business, business-related meals and entertainment, professional publications, and company cars used for business driving.โฃ
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๐. ๐๐ญ๐ก๐๐ซ ๐
๐ซ๐ข๐ง๐ ๐ ๐๐๐ง๐๐๐ข๐ญ๐ฌ: Other tax-free employee fringe benefits include employee stock options, employee discounts (up to 20% off), meals provided for the employer's convenience (not deductible by the employer after 2025), adoption assistance, achievement awards (not including cash, gift cards, vacations, meals, lodging, theater or sporting tickets, stocks, or bonds), and retirement planning help, employee gyms, and free services provided to employees. Other de minimis (minimal) benefits can also be provided. These are things that cost very little like occasional parties or picnics for employees, and occasional tickets for entertainment or sporting events.โฃ
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Offering these benefits not only makes your practice an attractive place to work but also helps you save on taxes. It's a win-win! Remember, it's always a good idea to consult a financial expert to make sure you're getting the most out of these perks for both you and your team.โฃ
