Fringe benefits are any extra employee benefit one receives in addition to or instead of a salary for services provided.  Put simply, fringe benefits are the little “perks” employees receive for working at a company that isn’t included in an employee’s regular income.

It is important to note, however, that an individual doesn’t necessarily need to be an employee to receive these benefits. Independent contractors, partners, or directors performing services for an employer may also receive fringe benefits. 

Some common examples of fringe benefits are:

• Health insurance
• Life insurance
• Tuition assistance
• Company-paid meals
• Wellness programs
• Paid time off
• Commuter benefits
• Health savings accounts
• Company car
• Cafeteria plan

The IRS indicates in IRS publication 15-b that any fringe benefits offered are taxable income unless explicitly excluded by the law. Exclusions may include the full value of the benefit or part of the value of the fringe benefit in the employee’s pay.

Typically, benefits that are considered ‘exclusions’ do not need to be reported on the W-2 as they aren’t subject to federal income tax withholding, social security, Medicare, federal unemployment (FUTA) tax, or Railroad Retirement Tax Act (RRTA) taxes. Here’s a list of fringe benefit types that qualify for full or part tax exemption:

• Accident and health benefits.
• Achievement awards.
• Adoption assistance.
• Athletic facilities.
• De minimis (minimal) benefits.
• Dependent care assistance.
• Educational assistance.
• Employee discounts.
• Employee stock options.
• Employer-provided cell phones.
• Group-term life insurance coverage.
• Health savings accounts (HSAs).
• Lodging on your business premises.
• Meals.
• Moving expense reimbursements.
• No-additional-cost services.
• Retirement planning services.
• Transportation (commuting) benefits.
• Tuition reduction.
• Working condition benefits.

Note: Be sure to verify the exemption status of each benefit type here.