1. Money

Expenses for Employee Benefits

By

Employee Benefits

What You May Deduct
You may deduct expenses for benefits paid to employees. This includes:

  • Health Plans
  • Life Insurance coverage
  • Dependent Care assistance
  • Cafeteria Plans
  • Educational Assistance

What You May NOT Deduct for Commissions and Fees
You may not deduct the cost of dues at golf clubs or country clubs for employees. You may not deduct the cost of life insurance for anyone associated with your company if you are the direct or indirect beneficiary.

Where to Show these Expenses

  • For sole proprietors and single-member LLCs, show these expenses in the "Expenses" section of Schedule C
  • For partnerships and multiple-member LLCs, show these expenses in the "Deductions" section of Form 1065
  • For corporations, show these expenses in the "Deductions" section of Form 1120.

Special Notes:
You may not provide special benefits to "key employees" (the highest-paid employees or those serving as officers, for example) to the exclusion of other employees. In other words, you must offer the same benefits to all employees.

For More Information
See IRS Publication 15B for more information on specific employee benefits.

Disclaimer
This article presents general information; I am not a tax attorney or tax preparation specialist. Refer to IRS publications and refer questions to your tax consultant.

  1. About.com
  2. Money
  3. US Business Law / Taxes
  4. Business Tax Deductions & Credits
  5. Tax Deductions: A to Z
  6. Deducting Employee Benefit Expenses - How to Deduct Employee Benefit Expenses

©2014 About.com. All rights reserved.