Putting personal "benefits" on my W2

?Our company has a part time handyman, and right now his work load is

Why would you add the value of his work to YOUR W-2?

He earned the money so it should be reported to him, not to you. Whether your company will allow you to pay him via an after tax withholding from your wages may be possible, but it seems like a lot of work for the H/R department.

Gene E. Utterback, EA, RFC, ABA

The OP would be receiving compensation from his employer if the employer paid for another employee to do personal work for the OP. That is why the value of the service would be on the OP's W-2.

This does not sound clean. Anyway, because the amounts are added to your W-2, the company gets a bigger deduction -- ie, if your salary is

50k, the company deducts 50k, but because of the work they now deduct 50,250. Anyway, if your tax rate is higher than the company's tax rate, the IRS ought to be happy. Also, as the handyman is working at a new site, isn't this a new job, to be reported on Schedule C? In this case the handyman would also report $250 on his Schedule C, and pay FICA + federal + state tax. So essentially the $250 is double taxed by both you and the handyman.

There's no double dip here. It's no different than any other taxable fringe benefit provided by an employer, such as group term life insurance in excess of $50K. The company deducts the payment to the handyman, but doesn't get another deduction from the W-2 reporting. If the OP's salary were $50K, the company would still deduct $50K for salary (plus $3825 for the employer side of FICA/medicare).

Regardless of where the handyman is working, there is no Schedule C. He is employed by the company, not the OP. It's possible the handyman might be able to deduct travel expense if he has to report to the company site on the same day as working at the OP's house.

Ira Smilovitz Leonia, NJ

I guess I didn't explain it adequately. He would get paid exactly as always, and it would be reported as always. However he would be doing some work at my house instead of at the company. The value of his work would show as compensation to me, because I was getting something of value from the company. If my normal pay is X and the value of his services is Y, then my W2 would be for X+Y. HR is happy to cooperate. It benefits him, me, and the company.

Why would they be doing that? That would be like saying the employer bought the employee a car as a bonus, and the employer got to deduct the cost of the car twice because not only did it pay for it, but put it on the employee's W-2. That's not the way it works.

The handyman is already reporting what he is getting paid. There is no reason for him to report it twice.

___ Stu

Okay... It wouldn't affect the handyman at all. Between the company and me, it would be treated as a taxable fringe benefit. That sounds good to me, unless someone disagrees. But is the taxable fringe benefit deductible for the company? I did a little reading and found that club dues were NOT deductible. I am guessing this wouldn't be either. So the IRS gets to tax the work twice, but gives only one deduction. They should be happy. Still, it would work for us.

I don't see why not.

It's not a benefit offered to all employees on the same basis, so I doubt it should be treated as a fringe benefit, taxable or not. Why not just treat it as wages, like any bonus would be?

Some dues are not considered a legitimate business expense. But in your case they are pay you and you aren't deducting it. So it's like wages. Yes, the IRS can come in and say your wages are too high and that what is more than reasonable won't be deductible to the company. But that almost never happens, except in small corporations where they try to convert deductible wages into nondeductible dividends. And even those are pretty rare.

___ Stu

It's true that the company is getting a double deduction, but the company is also in effect paying the handyman for work he doesn't perform. While he is working on the OP's house, he is getting paid by the company for not working for the company. You might argue that compensation for work not performed is not a business expense, hence not deductible.

I'm equally confused, and this is starting to sound like a Monty Python routine. Anybody want some cheese?

Excessive pay is not an issue; the amount involved is pretty small. Seems wrong to call it wages when the company is not actually paying me anything; but what do I know. Can wages be non-monetary? I am not an accountant, so excuse me if this sounds foolish (I can't keep debits and credits straight), but wages are increasing pay and decreasing cash. This would be increasing pay and decreasing what? The handyman's pay?

What's the reason to open the can of worms about the work for an employee and just pay the employee's wage if it's the company's desire to keep him?

Surely there's _something_ he could do if it's repainting the lines in the parking lot...

There is no double deduction. The company pays once and deducts it once. The question is whether it is considered taxable for the employee who gets a personal benefit from something his employer pays for.

No, he is working for the company. The company is essentially telling him to work on the OP's home. There is nothing inherently wrong with that, as long as it is properly accounted for.

You could argue that a Christmas gift or a bonus payment isn't compensation for work because it isn't required to be paid under a contract. But it's still deductible. This likely falls into the same category.

Confused is a good word, yes.

___ Stu

On Jan 31, 5:44 pm, Confused wrote: ...

...

Yes.

Hire him from the company: pay the company (cash) for the value of his time.

Seth

That makes sense. I used to work at a company that made money by hiring out two surplus programmers. It avoids the W2 issue. Is the IRS going to like it or dislike it anymore than the alternative?

I pay a company (that happens to be my employer) to have a handyman come to my home and make repairs. There are 3 entities involved.

(1) The IRS pays no attention to me, because that's a personal transaction and I don't have to tell them about hiring plumbers, electricians, etc. for my personal home.

(2) The IRS pays no attention to the handyman because he's working for a salary the same way he has been for years, for the same company.

(3) The IRS pays no attention to the company for hiring out an employee to get some revenue from his time when they can't use him internally. So long as the company reports the revenue, there's no issue.

Seth

And the parrot is most definitely dead.

Katie in San Diego