Glossary
Payroll

Fringe Benefit

By: Alec Hollingsworth
Updated:  
June 16, 2025

DEFINITION:

A fringe benefit is any non-wage compensation given to employees, such as insurance or retirement contributions, in addition to their salary.
A fringe benefit is a form of compensation provided to employees in addition to their regular salary or wages. Examples include health insurance, retirement plans, childcare assistance, employee discounts, and housing allowances. These benefits can be offered as a way to attract and retain employees, improve job satisfaction, or fulfill legal requirements. In nonprofit organizations, fringe benefits may have unique tax implications, and the value of certain benefits may need to be reported as taxable income. Correctly tracking and reporting fringe benefits is essential for compliance with IRS regulations and for maintaining transparency in payroll processes.

Key Takeaways

  • Fringe benefits are non-wage compensations for employees.
  • They can impact payroll taxes and reporting requirements.
  • Proper tracking ensures compliance and transparency.

Why It Matters

Fringe benefits affect payroll taxes, compliance, and employee satisfaction.

Real World Example

A small nonprofit offers its employees health insurance and provides a monthly stipend for public transportation. These are considered fringe benefits because they are given in addition to regular pay. The nonprofit must track the value of these benefits, ensure appropriate payroll tax withholdings, and report them correctly on employees' W-2 forms at year-end. Using accounting software like Aplos, the organization streamlines tracking and reporting, avoiding compliance issues and ensuring that employees receive all required benefit documentation.

How Aplos Helps

Aplos allows nonprofits to manage payroll efficiently, including the tracking and reporting of various fringe benefits provided to employees. With Aplos, organizations can ensure proper categorization of these benefits for accounting, compliance, and tax reporting purposes, helping to simplify year-end reporting and maintain transparency.
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Frequently Asked Questions

What qualifies as a fringe benefit?

Any non-wage compensation provided to employees, such as insurance, retirement contributions, and employee discounts, qualifies as a fringe benefit.

Are fringe benefits taxable?

Some fringe benefits are taxable and must be reported on employees' W-2 forms, while others may be excluded from taxable income based on IRS rules.

How does Aplos help with fringe benefits?

Aplos enables nonprofits to accurately track, categorize, and report fringe benefits, ensuring compliance with payroll regulations and simplifying tax reporting.

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