The federal government, and maybe your state, is taking a slice of your earnings each paycheck in taxes. Two of those benefits, Social Security and Medicare. But there are benefits that you could get from your employer without paying any taxes on them.
Here are seven benefits that you can get tax free from your employer. These are the qualified IRS fringe benefits your employer provides, and they include several important benefits for your everyday life.
Health benefits top most lists as the most important benefit an employer can offer. Insurances include health, dental, and vision insurance and potential costs that do not fall under regular insurance.
Do you want to get a degree so you can get a promotion? Your employer is allowed to pay you up to $5,250 tax-free for tuition, fees, books and other educational expenses.
Dependent care assistance
Employers can provide up to $5,000 per year for dependent care like child care. There’s also a tax credit available, so you have figured out which one will save you more money on taxes between the two types of assistance.
Long-term care insurance
You never know when you may need long-term health care, like a nursing home. This employee benefit is not taxable on the premiums paid for this type of insurance. However, if the benefit goes above the IRS limit, you have to pay some taxes.
If your employer is paying for your disability insurance premiums, and you are the beneficiary, the premiums are not considered income and are tax-free. Employees must pay income tax on disability benefits they receive under the policy unless the employee has the loss of a body function or limb.
Group term life insurance
You can also receive tax-free life insurance from your employer. This benefit is worth up to $50,000.
Employers can allow you to save up to 40 percent of your commuting costs tax-free through commuter benefits.
With commuter benefits, you can save $265 per month toward the cost of commuting. You can spend the money on public transportation like subways, buses or ferries, rideshares or qualified parking.
Many tax-free benefits can add to your quality of life and save you some money too.
If you are interested in commuter benefits, download our 101 Guide to learn more: