What’s included within a compensation package? The IRS stresses the value of like all types of compensation. In other words, IRS regulations are pretty distinct about what things can and can not be excluded from revenue. Trouble regions that regularly crop up include things like the following:
- Expense reimbursements
- Gifts and gift certificates
- Personal use of employer-owned property
- Spousal travel expenses
- Club memberships
- Personal components of business travel
Unless a distinct exemption applies, every single of those elements requires to become added into any employee’s revenue no matter if or not they’re treated as revenue for revenue tax purposes.
Identifying the more components of a compensation package
The following forms of compensation are acceptable for organizations to spend, but they ought to be reported as compensation:
- Non-cash items: Any and all forms of cash and non-cash compensation, including salaries, bonuses, severance payments, and deferred compensation.
- Insurance premiums: Payments for liability insurance premiums, or the payment of taxes or certain expenses.
- Other benefits: All other benefits that are meant as compensation, whether or not they might be included in gross income for income tax purposes.
- Fringe benefits: Most taxable and nontaxable fringe benefits.
- Interest-free loans: Foregone loan interest.
