10 Jul Reward Yourself With Tax-Free Supper Money!
Working long hours can be a morale buster for your employees. The tax law provides a benefit that can be a perfect solution for this problem; give them some tax-free cash!
This strategy creates value for you and your employees.
The best news of all, is that you’re eligible as well as a business owner. To meet the benefits of this valuable tax deduction, you need to adhere to some rules.
Tax Rules to Receive this Deduction
- you provide the benefit occassionally
- you pay no more than a reasonable amount
- the meals enables your employees to work overtime
- you do not compute the benefit based upon the hours worked
If the supper money payment does not meet these 4 rules, then the benefit is considered taxable compensation to the employee subject to withholding taxes.
Some Further Clarifications
The term occasional means not regular or routine in the tax code. This is based on a case by case basis, and its best if the allowance is at the discretion of the employer rather than a formalized company policy. Reasonable can vary from case to case as well, depending on the restaurants closest to you. The overtime rule rule is best adhered to if the employee eats the meal during the period that he or she works overtime.
Supper Money for the Owner
You may qualify for this benefit for yourself, even as a sole proprietor; of course also as an employee of your corporation. Even though you meet the employee definition to qualify for this benefit, I recommend that you utilize this deduction only when your employees are working overtime as well.
So, when work suddenly causes your employees to work overtime, provide the supper money tax benefit, and receive a 100% tax deduction for the cost.