The best kind of benefit is a fringe benefit, right?
As it turns out, the IRS has a guide for Federal, State, and Local Governments (FSLG) governing the tax rules of fringe benefits and the reporting of fringe benefits! We ran into this the other day as my lovely wife was signing up for a parking pass at her school. As a graduate student, she’s technically faculty and an employee. Since it’s a public university, the University of Maryland, that makes her a government employee.
So she’s signing up for this parking pass and one checkbox surprised her:
I understand and agree that by giving authorization to have automatic parking deductions taken out of my paycheck the deduction will be on pre-tax basis and will not be included in my Federal, State or FICA wage base.
That’s when she asked me if she was reading it right – “Does that mean I’m paying for my parking pass with pre-tax money?”
(Click to continue reading…)