How is a Perk different from an Allowance?
Hi Bernadette or anyone,
Here is another question:
How is a Perk different from an Allowance?
When my father lived in Saudi Arabia, he used to get allowances for everything. I never understood exactly what an allowance was. But it was always a monthly stipend for things like education, cars, housing, etc.
What benefit does the employer derive from providing an allowance instead of simply providing additional salary money?
I don't know about the laws in Saudi Arabia but an allowance is the same as a perk. Here in the United States you used to able to offer theses incentives in lieu of salary because it was not taxable to the employee. Those days are now long gone.
So is there any way that I can do anything nice for my best employees without them paying more in taxes and it still be something that my company can write off?
Re: Okay
How about dinner for two at a nice restaurant or a paid day off. A parking space in your parking lot reserved for VP's. Plaques and an office get-together to announce the "Employee of the Month". A gift certificate for their favorite store. This is just to name a few.
PS:
Thanks! That's Percy. He's known all over Ezboard. I lost him three years ago come this June but I still have four more left. I just got a new addition last June.
Thank you!
Thanks Bernadette,
What about like a little trip down to Savannah at this little cottage we discovered? Could I offer that to my best employee, still write it off and for her not to have to have that as increased taxable income on her end?
Where is the limit?
Narayan
Since you like cats, please read my journal about Sophie, my black cat, who I also lost several years ago:
Re: Thank you!
That's not a good idea unless the company owns that little cottage in Savannah. You would be trying to write this off as a business trip but she would have to see a client to meet the requirements. Have any clients in Savannah?
Re: Thank you!
Bernadette,
So how do business write off year-end trips for the top 10% of their employees or whatever?
BTW, we do have business there. We are also trying to sell some of those B&Bs on our web design services.
Narayan
Narayan, you need an accountant
Housing allowances paid to employees working away from home, especially in foreign countries, are generally excludible from US income. In the US, you can deduct a lot of expenses for temporary employment away from home, but that gets limited because the presumption is that your tax home is where you work, and the presumption is pretty much non-rebuttable if your employment lasts over a year.
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