Part 7: Providing Property or Services to Employees
Your company can provide any employee—even if it discriminates in favor of officers or highly compensated people—property or services under both the following conditions:
- The value of the property or services is so small or inconsequential as to not warrant an accounting.
- The property or services are not provided too frequently.
Thus, even if a fringe benefit were small in value but provided daily, it would not be deemed de minimis. It must be both infrequent and inconsequential to be a de minimis fringe benefit.
Example: Financial Destiny is a small corporation that provides income opportunities.
If it provides a one-time payment of $1,000 to an employee, this would not be deemed inconsequential and would be fully taxable.
Example: Financial Destiny also provides bus fare for some employees daily. Even though the value of this benefit is inconsequential, it’s provided too frequently, so the total value of the fares would not be considered inconsequential.
Sandy’s note: Any use of an employer-provided car, constant use of a season tickets, or membership in a country club would not be a de minimis benefit. Such benefits may qualify as working-condition fringe benefits, however.
Examples of De Minimis Benefits
Now that you know what benefits are not de minimis, here are some de minimis benefits that can be provided:
- Occasional typing of a personal letter by a secretary
- Weekly coffee and donuts (which are 50% deductible)
- Holiday gifts of low value
- Holiday turkeys if cost is usually less than $25
- Occasional theater and season tickets
- Free soft drinks
- Occasional use of the copy machine, fax machine, or other similar equipment if personal use is less than 15 percent
Sandy’s note: The IRS strangely has noted that monthly transit passes that cost no more than $21 would be deemed de minimis if paid to an employee. But it doesn’t treat the self-employed as employees. Sorry! Also, this benefit does not seem affected by any of the deductions cuts in the new tax laws.
Sandy’s note: If you operate as an S corporation and own more than 2% of the stock, there is no problem for you. This benefit is available for everyone and all entities
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