Article Date:
January 2016

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Fringe Benefits for an Employee-Spouse in an S Corporation



I am the sole owner of an S corporation. My only employee is my spouse. I read somewhere that I can provide certain fringe benefits, such as coffee and soda, that I can deduct as a business expense and that are tax-free to my spouse. Are there other fringe benefits I can offer that will have the same beneficial tax effect?


Absolutely! There are plenty of fringe benefits that will have the same tax effect—meaning you get to deduct the full amount as a business expense and your spouse gets a tax-free benefit.


But just like in real life, your spouse can complicate things—at least when it comes to fringe benefits. In your S corporation, your spouse is not a regular employee to whom you can provide all fringe benefits tax-free while deducting those expenses on your tax return.


When your S corporation has your spouse as an employee, the tax code gives you a limited list of fringe benefits. Although they are limited, we expect you will like them just fine.


Your question specifically mentioned coffee and soda. Coffee and soda fall into one category of an agreeable list of tax-free de minimis fringe benefits that you can deliver to anyone and everyone in the corporation.


This article explains both the fringe benefits (de minimis and otherwise) you can give to your employee-spouse tax-free and those you need to avoid. ... Log in to view full article.

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