If you’re like most people, you need to save money wherever you can. One of the best ways to do this is to figure out which expenses are tax deductible. Finding this out is just one step toward saving money and prospering financially.
Your Employee Benefits: Which Ones Are Considered Tax Deductible?
In order to benefit yourself as well as your employees, you should consider those which are tax deductible. For instance, more and more employers are providing their employees with smartphones. These improve communication and help employees carry out many aspects of their job. Even better: most cell phones and plans can be tax deductible, as long as they’re affordable. According to TurboTax, if thirty percent of your usage is work-related, you can deduct thirty percent off your phone bill.
Benefits that are tax deductible in both the initial cost and the cost of the employer’s contribution:
- Group life insurance
- Provincial Health plan.
Benefits that are tax deductible only for the initial cost:
- Employment insurance
- Retirement Compensation Arrangement
- Deferred Profit Sharing
- Registered Pension Plan
- Dental plan
- Short- and long-term disability
When it comes to insurance premiums, most aren’t deductible. There are some situations, though, in which exceptions are made. If the premiums are paid by the corporation, then they may be tax deductible. In another scenario, a life insurance policy can be given by a corporation as a charitable donation. If the employer continues to pay the premiums, they could get a fifteen to twenty-nine percent tax break. In these situations, a professional should be called in to advise.
Employee Tax Expenses: What You Need to Know
Besides knowing whether an employee benefit is tax deductible or not, you need to know some other tax basics. For example, as a Canadian employer, it is your obligation to make deductions from your employees’ paycheck. Deductions will include:
- CPP (Canadian Pensions Plan) contributions: both your contribution and the employees.
- EI: Employment Insurance premiums.
- Income tax for each pay period.
You will need to pay these fees monthly or quarterly. Failing to do so could result in a penalty. If you are tardy with the remittance payments you will be responsible not only for a penalty fee but for interest which will be applied from the payment due date.
Don’t Try to Figure This Out On Your Own: Get Some Professional Help
When it comes to anything tax-related, your best bet is not to try and go it alone. As tempting as it may be to do some research and figure some things out on your own, your best bet is to invest in some professional help. Your accountant or a professional tax preparer would be in the best position to help you. They do this for a living and know all of the ins and outs of current tax laws. To save the most money and avoid getting into some tax-related trouble, talk to your accountant or tax preparer to find out which employee benefits are tax deductible.