Latest From the S Providing Disaste Payments to Emp 04:05 ISSUE 4
By Michael Baer
Most know that when a large disaster occurs in the United States, the Federal Emergency Management Agency, or FEMA, provides individuals affected with numerous resources, including temporary housing in some cases, and monetary support.
Nongovernmental groups and charities, like the Red Cross and World Central Kitchen, also move to help those impacted. With large disasters such as wildfires, floods, tornadoes, and hurricanes seemingly occurring with more frequency, businesses often step up as well, seeking to help affected employees. Can Employer-Provided Assistance to Employees be Tax-Free? A key Payroll question when a U.S. firm’s management decides to offer some kind of assistance to employees in these situations is whether the employer’s program is employment
tax-free. This is because, for the most part, payments to workers from employers, cash or noncash, unless specifically exempted in the U.S. Internal Revenue Code or Treasury Regulations, are to be recorded as compensation for employment tax purposes, with taxes withheld at the source. According to the Code and regulations, certain qualified de minimis fringes, transportation benefits, qualified business travel expenses, training costs and educational assistance, as well as contributions to retirement and health care plans all can be excluded from federal income tax to some extent.
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