Now that the year is over, we’re in the throes of preparing W-2’s for our payroll clients. Often we find that clients aren’t always aware of all the taxable compensation their employees receive, especially those hidden benefits that nobody thinks about.
Remember that if the tax code doesn’t specifically exclude a benefit from tax, it should be included in employee wages. That includes things like gifts to employees – gift cards, holiday and birthday gifts; personal use of company assets such as vehicles, laptops or iPads; vacations or trips that are given as rewards; and spouse travel costs paid by the company.
If in doubt, ask us! It’s better to be sure than to have the IRS uncover taxable fringe benefits in an audit and have to pay not only the taxes but also applicable penalties.