What are Employee-Spouse Fringe Benefits? S-Corp.
If you are the sole owner of an S Corporation and your only employee is your spouse, they may be eligible for fringe benefits such as coffee, soft drinks, and occasional sporting event tickets. The list of available fringe benefits is limited. But, depending on your situation, it might surprise you to learn what is in that list.
First of all, we need to understand tax law regarding ownership. Specifically, the law states that if you own more than 2% of the outstanding stock of your S corporation, your spouse owns the same amount. Similarly, if you own 80%, so does your spouse. Now, based on this information, let’s look at which fringe benefits are available.
Allowed employee-spouse fringe benefits.
There are a number of fringe benefits that you can offer your spouse. These include Employee Achievement Awards, Medical Savings Accounts, Working Condition Fringe Benefits, and more. However, “De Minimis Fringe Benefits” include some interesting options:
- Typing of personal letters by a company secretary – on occasion
- Personal use of an employer’s copying machine – on occasion
- Cocktail parties, group meals, or picnics for employees and their guests – on occasion
- Traditional birthday or holiday gifts of property (but not cash or cash equivalents such as gift certificates) with a low fair market value
- Occasional theater or sporting event tickets
- Coffee, doughnuts, soft drinks, and local telephone calls
- Flowers, fruit, books, or similar property provided to employees under special circumstances (illness, outstanding performance, or family crisis)
Things to remember.
|1. Employee-spouse fringe benefits are more limited than for a regular employee in your S corporation.
2. You can’t provide regular employee fringe benefits to your employee-spouse. But, the allowable list is pretty extensive. Therefore, we welcome you to pick up the phone to ask us about your specific circumstance.
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