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Friday, April 17, 2015

What is a fringe benefit?

Fringe Benefit:
Fringe is nothing but an extra/ an edge over something etc.
These are usually paid by employers to the employee to retain the talent pool. Fringe Benefits is a supplemental to employee's salary. Like an Employer can offer Employer Paid Life Insurance to an employee.

Most of the cases , fringe benefits are non-taxable unless until they represent a fair market value.
So these benefits doesn't fall under Employee taxable income. That's the reason the premium deducted in the Pay comes under Pre-Tax.

However, this depends on the  rules set by the IRS (Internal Revenue Service) in US.

Suppose if a coverage limit is set for Life Insurance and if an employers offers more coverage than the coverage limit set by the IRS then the extra perk becomes taxable.

Other examples of Fringe Benefits is like using company provided car, getting stocks etc.

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