are fringe benefits part of salary and benefit expenses
Standard accounting and budget practices usually require that you provide enough detail about expenses for an auditor to determine the purpose of the expense. An organization with paid staff shows the cost of employee payments in two separate line items: salary payments and employee benefits, or fringes. 1. Create a list of the fringe benefits offered in addition to a salary. 2. Ascribe numerical values to each benefit. 1  For instance, if you are offered 2 weeks of paid vacation, calculate 2 weeks of the offered hourly wage or salary. 2  Do the same for paid sick leave or personal time. Federal Fringe Benefits. The federal government fringe benefits include Social Security taxes paid by the employer on behalf of each employee. The Social Security Administration sets the percentage that the employer must take from each employee, based on earnings and the employer’s contribution. If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. However, you can use special rules to withhold, deposit, and report the employment taxes. These rules are discussed in section 4. Use of the special accounting rule is optional. You can use the rule for some fringe benefits but not others. The period of use need not be the same for each fringe benefit. However, if you use the rule for a particular fringe benefit, you must use it for all employees who receive that benefit. Exclusion from wages. You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. The excludable annual amount is $1,600 ($400 for awards that are not “ qualified plan awards ”). The fringe benefit rate of 36% is an average rate that represents the cost of fringe benefits normally charged. It covers the costs for Social Security, Medicare, retirement, disability, and life & health insurance. 1  Part-time employees: 7.65%. 2  Students (academic year or summer, enrolled in the University): No charge. Identifying Fringes. In a budget that has personnel or paid staff, fringe benefits include your costs for mandatory fees and taxes required by state and federal laws. If your organization provides insurance, retirement plan contributions or tuition reimbursement, include these expenses in fringe benefits. Benefits more than the limit. If the value of a benefit for any month is more than its limit, include in the employee's wages the amount over the limit minus any amount the employee paid for the benefit. You cannot exclude the excess from the employee's wages as a de minimis transportation benefit. There is far more to the total cost of an employee than just his or her salary or hourly wage. Fringe benefits, those perks that employees receive for free along with a paycheck, can add a substantial amount to human resource expenses.
Yes