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Using a C-Corporation to Write Off Fringe Benefits
Fringe benefits are considered non-cash compensation or benefits for employees that are not taxable. Section IRC 61 of the tax code says that employees must include the value of the benefits they receive as income unless specifically excluded by a provision under the code. So, for the sake of discussion tax-advantaged fringe benefits are those that a corporation may write-off that are excluded from the taxable income of the employees.
Most fringe benefits for employees and shareholders of C corporations are fully deductible. However, in most cases LLCs, partnerships, and even S corporations may not deduct or write off fringe benefits. So, these deductions are a sole benefit of C corporation status. Health insurance premiums are a major tax-deductible benefit employees and shareholders enjoy that C corporations are able to fully deduct from the corporation's taxable income.
C Corp Fringe Benefits
A C corporation is a company that is legally viewed as an entity distinct from its members, allowing the company to be taxed instead of those who run it. One advantage of C corporations is that members and employees can receive fringe benefits. Many benefits are tax deductible for the corporation, creating an incentive to offer fringe benefits. Several fringe benefits can be offered that qualify for deductions, allowing the executives of a C corporation to choose the benefits that best serve their company.
Health And Insurance Benefits
Health and insurance benefits are commonly offered as fringe benefits by C corporations. Health and insurance fringe benefits include company-paid health insurance, life insurance and health savings plans. Dental and eye care options may be included with the health insurance offerings.
Education Assistance
Education assistance as a fringe benefit includes tuition payments made by the company and funds used to pay for textbooks or other items required for courses being taken by employees. Many companies restrict their education assistance benefits to courses or work toward a business degree or other field that relates to the work done by the company.
Company-Related Benefits
C corporations that are traded publicly often offer stock options or shares of stock at a discounted price as a fringe benefit. Another common company-related fringe benefit is a discount on goods or services sold by the company.
Transportation
Company-owned cars or other vehicles are sometimes offered as a fringe benefit by C corporations, though this benefit is often reserved for management or other high-level employees. In cities where public transportation is common, corporations may also offer public transportation vouchers or other transport passes.
Moving And Housing Benefits
Individuals who move to a new city or home because of work may have their moving expenses covered by their employer as a fringe benefit. C corporations operating in certain industries sometimes offer housing for portions of their work force as a benefit as well.
Other Fringe Benefits
Retirement plans, memberships in fitness clubs or access to company fitness equipment, and meals during work hours may be included in C corporation fringe benefit packages. Cash, gift certificates and other awards for achievement or loyalty may also be given as occasional benefits.
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