People often ask me about my speaking schedule, so in 2014 I am resolving to write posts to update you on where I will be and when. I am honored to speak at many great conferences during the year and I am always excited to have the opportunity to catch up with people that have joined me on my blog.
February 20th I will be at speaking at the Texas Ministry Conference in Houston, Texas. The conference is held at Champion Forest Baptist Church and is hosted by Church Supplies and Services, Inc. This year I am co-presenting with my husband, Frank Sommerville, on issues involving facilities usage, the legalities to consider with foreign activities as well as our general tax and legal update. However, we are just a small part of this conference. Consistently year after year the conference provides a great slate of speakers and topics and offers something for everyone in church administration. In fact, there are so many great topics, that I encourage my churches to take several people in order to take advantage of all the information available.
You can register at www.TexasMinistryConference.org or call toll free 888-350-3264. First time attendees will be entered in special drawings to be held during lunch. I hope to see some of you in Houston in February!
Wednesday, January 22, 2014
Wednesday, January 15, 2014
New IRS Form 8822-B Requires Action By Virtually All Organizations
In an effort to update its records, the IRS is requiring any organization or entity that obtains an employer identification number (EIN) to report to the IRS a change in the "responsible party" within 60 days of that change. This change is reported using Form 8822-B, Change of Address or Responsible Party - Business. This is a good thing as it helps to provide assurance that critical communications from the IRS will not be directed to a person who is no longer associated with an entity. However, in its efforts to update contact information, the IRS is requiring virtually every entity to provide current information.
Who is a "Responsible Party"
Currently the application for an EIN requests the name and identifying number of the "responsible party". This is defined to be as the person who has a level of control over, or entitlement to, the funds or assets in the entity and the disposition of its funds and assets. This is a fairly general definition and may actually apply to multiple people within an entity. However, when applying for the EIN, an entity is only required to list one responsible party. In essence, this is listed as the primary contact for the entity and provides assurance that mail sent from the IRS will be directed to someone with enough authority to deal with the issue at hand.
Why does this affect so many entities?
The complication enters the picture with the direction from the IRS that if the "responsible party" has changed prior to 2014, then the entity must file the Form 8822-B no later than March 1, 2014. Prior to January 2010, the term "responsible party" did not exist. Therefore, it can be presumed that if an entity obtained its EIN prior to January 2010, it should file the Form 8822-B by March 1, 2014 to declare its "responsible party". If an entity gained its EIN after January 2010, then it should check its application to see who was listed as the "responsible party" to determine if the filing is required. For the future, entities should understand that the "responsible party" must be updated in the event the listed party leaves the entity.
Form 8822-B
The form is used for both updating the "responsible party" for an entity as well as updating the address for an entity. It may be obtained at www.irs.gov for download. Contact your CPA or attorney, if your entity needs assistance in determining its reporting requirements.
In an effort to update its records, the IRS is requiring any organization or entity that obtains an employer identification number (EIN) to report to the IRS a change in the "responsible party" within 60 days of that change. This change is reported using Form 8822-B, Change of Address or Responsible Party - Business. This is a good thing as it helps to provide assurance that critical communications from the IRS will not be directed to a person who is no longer associated with an entity. However, in its efforts to update contact information, the IRS is requiring virtually every entity to provide current information.
Who is a "Responsible Party"
Currently the application for an EIN requests the name and identifying number of the "responsible party". This is defined to be as the person who has a level of control over, or entitlement to, the funds or assets in the entity and the disposition of its funds and assets. This is a fairly general definition and may actually apply to multiple people within an entity. However, when applying for the EIN, an entity is only required to list one responsible party. In essence, this is listed as the primary contact for the entity and provides assurance that mail sent from the IRS will be directed to someone with enough authority to deal with the issue at hand.
Why does this affect so many entities?
The complication enters the picture with the direction from the IRS that if the "responsible party" has changed prior to 2014, then the entity must file the Form 8822-B no later than March 1, 2014. Prior to January 2010, the term "responsible party" did not exist. Therefore, it can be presumed that if an entity obtained its EIN prior to January 2010, it should file the Form 8822-B by March 1, 2014 to declare its "responsible party". If an entity gained its EIN after January 2010, then it should check its application to see who was listed as the "responsible party" to determine if the filing is required. For the future, entities should understand that the "responsible party" must be updated in the event the listed party leaves the entity.
Form 8822-B
The form is used for both updating the "responsible party" for an entity as well as updating the address for an entity. It may be obtained at www.irs.gov for download. Contact your CPA or attorney, if your entity needs assistance in determining its reporting requirements.
Thursday, May 9, 2013
May 15th Filing Deadline Draws Close
As May 15th draws near next week, I want to remind our nonprofit organizations of two important deadlines.
Forms 990, 990-EZ & 990-N
For calendar year returns, Forms 990 and 990-T need to be filed by the 15th or properly extended. If an organization is extending Form 990-T, then it should deposit via EFTPS any tax that is due with the return to avoid late payment penalties and related interest. If the organization has less than $50,000 of gross income and less than $200,000 in fixed assets, it should file its Form 990-N by May 15th.
Form 5578
Another deadline often overlooked is the deadline for private schools that do not file Form 990 or Form 990-EZ to file Form 5578. Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt from Federal Income Tax is also due by May 15th for schools with a calendar year end. This return is generally required to be filed by churches that operate schools as a direct part of their activities or by church affiliated schools that do not have a Form 990 filing requirement.
The Form 5578 certifies that the school (church) has satisfied the applicable nondiscrimination requirements as detailed in Revenue Procedure 75-50. In general these requirements are:
As May 15th draws near next week, I want to remind our nonprofit organizations of two important deadlines.
Forms 990, 990-EZ & 990-N
For calendar year returns, Forms 990 and 990-T need to be filed by the 15th or properly extended. If an organization is extending Form 990-T, then it should deposit via EFTPS any tax that is due with the return to avoid late payment penalties and related interest. If the organization has less than $50,000 of gross income and less than $200,000 in fixed assets, it should file its Form 990-N by May 15th.
Form 5578
Another deadline often overlooked is the deadline for private schools that do not file Form 990 or Form 990-EZ to file Form 5578. Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt from Federal Income Tax is also due by May 15th for schools with a calendar year end. This return is generally required to be filed by churches that operate schools as a direct part of their activities or by church affiliated schools that do not have a Form 990 filing requirement.
The Form 5578 certifies that the school (church) has satisfied the applicable nondiscrimination requirements as detailed in Revenue Procedure 75-50. In general these requirements are:
- The governing documents contain the proper prohibition against discriminating as to admission or employment on any of the protected grounds other than based on religious discrimination;
- The school's handbook and other documents should also contain similar language;
- The school maintains records that indicate the racial make up of the student body, teaching faculty and administrative faculty; and
- The school/church has publicized its nondiscrimination policy using either the appropriate radio or televsion medium. (Internet does not qualify to meet this requirement.) There are some exceptions to this rule, but they are very narrow and do not apply to many church operated schools.
Monday, March 18, 2013
Want To Buy A Raffle Ticket?
When the Form 990 was redesigned in 2008, the form was rewritten to gain additional information regarding an organization's gaming activities. Gaming activities have to be separately reported in Part VIII of the form and in some instances, greater detail is required through Schedule G associated with the return.
With this additional information required, we are finding that many organizations are conducting some sort of gaming activity that previously was buried as a part of a fundraiser, such as a gala, dinner or golf tournament. What most organizations do not realize is that state laws always govern any type of gaming activity. While most people understand that state laws may regulate professional gaming activities, they fail to realize that state laws also regulate gaming activity that is carried out as a part of a fun filled event conducted by a nonprofit organization or a church.
At this point, I will apologize to all of my followers that are not from Texas. I have been asked to specifically blog the Texas rules for raffles. Realizing that some of my readers are from other states, I encourage everyone to do a little digging and determine how your state may be regulating raffles and determine if your organization is in compliance with the applicable state statutes.
In 1999, Texas passed The Charitable Raffle Enabling Act that allows for charitable raffles to be conducted by qualifying organizations. However, there are strict rules to be followed, if an organization desires its raffle to be covered by the act.
What Is A Raffle
In general, a raffle occurs any time someone pays for the chance to win a prize. Qualifying organizations are allowed to conduct two raffles each year that comply with the state law.
Who Can Conduct a Raffle In Texas
An organization has to be a qualified organization:
What Must the Organzation Do
The qualifying organization must follow a few rules:
Conducting an illegal raffle is issue for the organization's local district attorney. It is a Class A misdemeanor for conducting an illegal raffle and a Class C misdemeanor for participating in one. This means that the people actually conducting the raffle are at risk and should take seriously the above rules.
In essence, an organization cannot have an unplanned raffle or a spur of the moment raffle. Complying with the above rules take care and consideration. Therefore, organizations and churches should prepare policies and procedures to guide any type of activity that can be construed as a "raffle".
With this additional information required, we are finding that many organizations are conducting some sort of gaming activity that previously was buried as a part of a fundraiser, such as a gala, dinner or golf tournament. What most organizations do not realize is that state laws always govern any type of gaming activity. While most people understand that state laws may regulate professional gaming activities, they fail to realize that state laws also regulate gaming activity that is carried out as a part of a fun filled event conducted by a nonprofit organization or a church.
At this point, I will apologize to all of my followers that are not from Texas. I have been asked to specifically blog the Texas rules for raffles. Realizing that some of my readers are from other states, I encourage everyone to do a little digging and determine how your state may be regulating raffles and determine if your organization is in compliance with the applicable state statutes.
In 1999, Texas passed The Charitable Raffle Enabling Act that allows for charitable raffles to be conducted by qualifying organizations. However, there are strict rules to be followed, if an organization desires its raffle to be covered by the act.
What Is A Raffle
In general, a raffle occurs any time someone pays for the chance to win a prize. Qualifying organizations are allowed to conduct two raffles each year that comply with the state law.
Who Can Conduct a Raffle In Texas
An organization has to be a qualified organization:
- An association organized primarily for religious purposes that has been in existence for 10 years;
- A voluntary EMS that does not pay its members;
- A volunteer fire department that does not pay its members; and
- A nonprofit organization that:
- is at least three years old;
- elects its governing body;
- has 501(c) tax exemption;
- has members;
- does not distribute its income to its members; and
- does not participate in political campaigns.
What Must the Organzation Do
The qualifying organization must follow a few rules:
- They must have possession of the prizes that are offered.
- Prizes may not be cash or items converted to cash. (It is thought that this does not prohibit gift cards as long as they cannot be readily converted to cash.)
- If the organization purchases the prize, its value cannot exceed $50,000.
- It must print tickets that include the name & address of the organization, the price of the ticket, the date the prize will be awarded and a general description of each prize that is valued at more than $10.
- Tickets may only be sold by members or authorized representatives. They may not be sold by compensated staff. You also cannot pay someone to plan and conduct the raffle.
- The raffle cannot be advertised statewide or through paid advertisements. This means that it cannot be advertised on the organization's website as this would be considered as "state wide."
Conducting an illegal raffle is issue for the organization's local district attorney. It is a Class A misdemeanor for conducting an illegal raffle and a Class C misdemeanor for participating in one. This means that the people actually conducting the raffle are at risk and should take seriously the above rules.
In essence, an organization cannot have an unplanned raffle or a spur of the moment raffle. Complying with the above rules take care and consideration. Therefore, organizations and churches should prepare policies and procedures to guide any type of activity that can be construed as a "raffle".
Tuesday, March 5, 2013
IRS Expands Worker Reclassification Program
As if the IRS hasn't already given a huge gift to employers with the creation of the worker reclassification program in 2011, it has now topped off that gift with a big red bow.
In 2011, the IRS provided a means to allow employers to reclassify workers from independent contractors to employees in a fairly simple process with a very low cost. The effective cost was approximately 1% of the worker's compensation in the year previous to the reclassification. Compared to the fact that the traditional cost of reclassifying a worker was 10 to 15% of compensation for three years, the new program provided an easy and cost saving mechanism for solving worker classification issues. (See my post in October of 2011 for the original details of the program.) In December of 2012, the IRS expanded the program through Announcement 2012-45 and 2012-46.
Announcement 2012-45 expands the program in the following manner:
Originally the program stated that if the employer was undergoing an IRS exam, it was not eligible for the program. Now the employer will be eligible to participate in the program as long as the exam is not classified as an employment tax exam. It also clarifies that an employer that is a part of a controlled group must look to the entire group of employers when determining this criteria. Employers that are contesting a reclassification issue in court do not qualify for to participate in the program. Also, an employer is still ineligible if it is going through a DOL exam or a state employment exam.
Additionally, participation in the program no longer extends the statute of limitations on the Forms 941 that include the reclassification. All employment returns will maintain their natural statute of limitations.
Announcement 2012-46 went on to temporarily expand the program in an even greater manner:
Under the original program, the employer has to have properly filed all Forms 1099-Misc for any workers that it desires to reclassify as employees. If the employer failed to file the required forms in the previous 3 years, it is not eligible for the reclassification program. The IRS has alleviated this requirement for persons who apply to the program through June 30, 2013. This means that even if an employer did follow the law in reporting a worker as an independent contractor, it may still participate in the program through June 30, 2013. The amount assessed in this settlement program is higher than the regular settlement program as it assesses an amount equal to approximately 3.2% of the compensation paid in the previous year. There is a graduated penalty assessed for the nonfiling of the required Forms 1099-Misc. In addition, the employer must file all outstanding Forms 1099-Misc for the past three years.
This program is truly a gift to those employers who have misclassified workers. It provides a clean slate going forward as opposed to a potentially large tax assessment for each of the past three years. The IRS reports that nearly 1,000 employers have participated in the program to date. However, from experience, I know there are many more employers that need to participate in this program. If a church or nonprofit has fallen prey to bad employment classification habits, now is the time to break them and move forward into a new arena of better compliance as well as less monetary risk to the organization.
In 2011, the IRS provided a means to allow employers to reclassify workers from independent contractors to employees in a fairly simple process with a very low cost. The effective cost was approximately 1% of the worker's compensation in the year previous to the reclassification. Compared to the fact that the traditional cost of reclassifying a worker was 10 to 15% of compensation for three years, the new program provided an easy and cost saving mechanism for solving worker classification issues. (See my post in October of 2011 for the original details of the program.) In December of 2012, the IRS expanded the program through Announcement 2012-45 and 2012-46.
Announcement 2012-45 expands the program in the following manner:
Originally the program stated that if the employer was undergoing an IRS exam, it was not eligible for the program. Now the employer will be eligible to participate in the program as long as the exam is not classified as an employment tax exam. It also clarifies that an employer that is a part of a controlled group must look to the entire group of employers when determining this criteria. Employers that are contesting a reclassification issue in court do not qualify for to participate in the program. Also, an employer is still ineligible if it is going through a DOL exam or a state employment exam.
Additionally, participation in the program no longer extends the statute of limitations on the Forms 941 that include the reclassification. All employment returns will maintain their natural statute of limitations.
Announcement 2012-46 went on to temporarily expand the program in an even greater manner:
Under the original program, the employer has to have properly filed all Forms 1099-Misc for any workers that it desires to reclassify as employees. If the employer failed to file the required forms in the previous 3 years, it is not eligible for the reclassification program. The IRS has alleviated this requirement for persons who apply to the program through June 30, 2013. This means that even if an employer did follow the law in reporting a worker as an independent contractor, it may still participate in the program through June 30, 2013. The amount assessed in this settlement program is higher than the regular settlement program as it assesses an amount equal to approximately 3.2% of the compensation paid in the previous year. There is a graduated penalty assessed for the nonfiling of the required Forms 1099-Misc. In addition, the employer must file all outstanding Forms 1099-Misc for the past three years.
This program is truly a gift to those employers who have misclassified workers. It provides a clean slate going forward as opposed to a potentially large tax assessment for each of the past three years. The IRS reports that nearly 1,000 employers have participated in the program to date. However, from experience, I know there are many more employers that need to participate in this program. If a church or nonprofit has fallen prey to bad employment classification habits, now is the time to break them and move forward into a new arena of better compliance as well as less monetary risk to the organization.
Friday, June 15, 2012
Compensation - The Final Step is a Two Step
1) Determine the required withholding on all forms of compensation and
2) Determine the proper reporting of all compensation and benefits.
I am finally completing this series. I am to the step that most people are accustom to working with in order to do payroll. While most organizations do complete this step in regards to cash compensation, few seem to complete it correctly in regards to noncash compensation.
Some items of noncash compensation are not subject to withholding while others are. IRS Publications 15, 15A & 15B all deal with properly reporting compensation and fringe benefits. Since we now know what items the organization is providing to its employees, it should be fairly easy to determine any withholding requirements. (Remember that ministers are not subject to any mandatory withholding of federal income tax, so adding their benefits to payroll is fairly simple. Also, ministers are not subject to FICA/Medicare, so this also simplifies this process for their compensation.)
If an organization is using a payroll service, then it is best to remember that its payroll reports are generally prepared very quickly at the end of the quarter or the end of the year. Therefore, it is necessary to communicate with the service prior to the end of any reporting period. Otherwise an organization may find that it is necessary to amend payroll reports that have already been submitted to the IRS and the Social Security Administration in order to properly report some items of compensation.
Several items require special reporting on the Form W-2, so be specific about the benefits that are provided and review the instructions for preparing the Form W-2 each year. For example, dependent care benefits are reported in a separate box on the Form W-2 even though the benefit is not taxable to the employee if provided through a qualifying plan.
In summary, the number one area that can result in an IRS inquiry and/or in the assessment of monetary penalties is payroll reporting. Therefore, each organization should review all payroll filings carefully to determine if the proper amount of tax has been paid and if all items of compensation have been properly reported.
1) Determine the required withholding on all forms of compensation and
2) Determine the proper reporting of all compensation and benefits.
I am finally completing this series. I am to the step that most people are accustom to working with in order to do payroll. While most organizations do complete this step in regards to cash compensation, few seem to complete it correctly in regards to noncash compensation.
Some items of noncash compensation are not subject to withholding while others are. IRS Publications 15, 15A & 15B all deal with properly reporting compensation and fringe benefits. Since we now know what items the organization is providing to its employees, it should be fairly easy to determine any withholding requirements. (Remember that ministers are not subject to any mandatory withholding of federal income tax, so adding their benefits to payroll is fairly simple. Also, ministers are not subject to FICA/Medicare, so this also simplifies this process for their compensation.)
If an organization is using a payroll service, then it is best to remember that its payroll reports are generally prepared very quickly at the end of the quarter or the end of the year. Therefore, it is necessary to communicate with the service prior to the end of any reporting period. Otherwise an organization may find that it is necessary to amend payroll reports that have already been submitted to the IRS and the Social Security Administration in order to properly report some items of compensation.
Several items require special reporting on the Form W-2, so be specific about the benefits that are provided and review the instructions for preparing the Form W-2 each year. For example, dependent care benefits are reported in a separate box on the Form W-2 even though the benefit is not taxable to the employee if provided through a qualifying plan.
In summary, the number one area that can result in an IRS inquiry and/or in the assessment of monetary penalties is payroll reporting. Therefore, each organization should review all payroll filings carefully to determine if the proper amount of tax has been paid and if all items of compensation have been properly reported.
Tuesday, April 17, 2012
Compensation Planning - Part 7 of ?
My apologies for the break in this series. As we approached the April 17th filing deadline, I found that blogging rated way down on the list of activities that had to be performed. Thank you for your patience in waiting for the next installment in this series.
Step 7: What's Taxable
This is the most crucial step and is the one step that is often missed in properly reporting compensation. There is some frustration within the IRS that the only taxable compensation reported is the compensation that physically flows through an organization's payroll system. There is a tendency to ignore all the benefits and cash that do not flow through the payroll system. The result is that income has a tendency to be underreported. When an organization fails in its duty to properly report taxable income, it places its employees in serious jeopardy of potential penalties, additional taxes and even jail time.
Basic Rule
Each element of the compensation package has to be evaluated to see if it is taxable. Remember, that everything is taxable until a provision in the Internal Revenue Code says that it is not. Therefore, it should be presumed that something is taxable until it can be proven that it is not taxable.
Remember, when determining taxability, it must be determined for purposes of federal income tax, social security tax (FICA) and Medicare tax, if the compensation is for a nonminister employee. If for a minister, then the employer is only concerned about the taxability for purposes of federal income tax.
Making Determinations by Comparison
One of the biggest dangers in this area is making the determination based on what someone else is doing. You know how the story goes, Minister Joe goes to breakfast with all the other area ministers and returns with the information that over at First Church, Minister Steve has full childcare at their facilities and doesn't pay any tax on that benefit. Based on this information, Minister Joe now requests that he be able to place his children in the church daycare center free of charge and the value of the benefit should not be taxable to him.
Cautions:
There are many areas of the tax law that provide for tax free treatment of various fringe benefits. However, almost all of them require certain actions taken by the employer to achieve this preferential status. In the example above, First Church may have instituted a qualified dependent care plan. Such a plan, when it meets a series of qualifications, provides for tax free dependent care. Without meeting all the requirements, the benefit would be taxable to the emloyee.
Common Benefits Virtually Always Taxable
Cash - In any form, cash is virtually always taxable. This includes anniversary/birthday gifts; love offerings; flat allowances; and gift cards.
Autos - Outside of a documented reimbursement at the standard mileage rate, any other benefit connected to an auto has a taxable component. If the organization is actually providing the auto, there is always a taxable component. These rules have been around since 1984.
Housing - Housing provided to employees who are not ministers is more likely than not taxable. There are some exclusions, and they should be carefully considered. If the employee is a minister, it is taxable unless it is specifically designated, in writing and in advance of payment, that it is provided under IRC Section 107 as a housing allowance or a parsonage.
Common Benefits that Normally Require Written Plans and Nondiscrimination Requirements
Life Insurance
Dependent Care
Tuition Assistance
Tuition Reduction
Payment of Out of Pocket Medical Costs
Retirement Plan Contributions (there are some exceptions for churches)
Summary
The above discussion is not an exhaustive study of potential taxable income. This is the step in compensation planning that is generally left to the organization's bookkeeper, internal accountant and/or payroll service. Therefore, it is greatly beneficial for the organization to build a relationship with a trusted tax professional that will provide a resource to assist personnel with these determinations.
Step 7: What's Taxable
This is the most crucial step and is the one step that is often missed in properly reporting compensation. There is some frustration within the IRS that the only taxable compensation reported is the compensation that physically flows through an organization's payroll system. There is a tendency to ignore all the benefits and cash that do not flow through the payroll system. The result is that income has a tendency to be underreported. When an organization fails in its duty to properly report taxable income, it places its employees in serious jeopardy of potential penalties, additional taxes and even jail time.
Basic Rule
Each element of the compensation package has to be evaluated to see if it is taxable. Remember, that everything is taxable until a provision in the Internal Revenue Code says that it is not. Therefore, it should be presumed that something is taxable until it can be proven that it is not taxable.
Remember, when determining taxability, it must be determined for purposes of federal income tax, social security tax (FICA) and Medicare tax, if the compensation is for a nonminister employee. If for a minister, then the employer is only concerned about the taxability for purposes of federal income tax.
Making Determinations by Comparison
One of the biggest dangers in this area is making the determination based on what someone else is doing. You know how the story goes, Minister Joe goes to breakfast with all the other area ministers and returns with the information that over at First Church, Minister Steve has full childcare at their facilities and doesn't pay any tax on that benefit. Based on this information, Minister Joe now requests that he be able to place his children in the church daycare center free of charge and the value of the benefit should not be taxable to him.
Cautions:
- get the correct facts; i.e., does Minister Steve know what is really taxable to him;
- don't assume that First Church is doing things correctly; i.e., it is possible for large and well established churches or organizations to not do things correctly; and
- look to see how First Church could be providing such a benefit tax free and then pursue that avenue.
There are many areas of the tax law that provide for tax free treatment of various fringe benefits. However, almost all of them require certain actions taken by the employer to achieve this preferential status. In the example above, First Church may have instituted a qualified dependent care plan. Such a plan, when it meets a series of qualifications, provides for tax free dependent care. Without meeting all the requirements, the benefit would be taxable to the emloyee.
Common Benefits Virtually Always Taxable
Cash - In any form, cash is virtually always taxable. This includes anniversary/birthday gifts; love offerings; flat allowances; and gift cards.
Autos - Outside of a documented reimbursement at the standard mileage rate, any other benefit connected to an auto has a taxable component. If the organization is actually providing the auto, there is always a taxable component. These rules have been around since 1984.
Housing - Housing provided to employees who are not ministers is more likely than not taxable. There are some exclusions, and they should be carefully considered. If the employee is a minister, it is taxable unless it is specifically designated, in writing and in advance of payment, that it is provided under IRC Section 107 as a housing allowance or a parsonage.
Common Benefits that Normally Require Written Plans and Nondiscrimination Requirements
Life Insurance
Dependent Care
Tuition Assistance
Tuition Reduction
Payment of Out of Pocket Medical Costs
Retirement Plan Contributions (there are some exceptions for churches)
Summary
The above discussion is not an exhaustive study of potential taxable income. This is the step in compensation planning that is generally left to the organization's bookkeeper, internal accountant and/or payroll service. Therefore, it is greatly beneficial for the organization to build a relationship with a trusted tax professional that will provide a resource to assist personnel with these determinations.
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