What Are Fringe Benefits for Tax Purposes?
For U.S. federal income tax purposes, a fringe benefit is considered a form of pay for the performance of services, and is taxable unless the tax law specifically excludes it from taxation. Persons who perform services include employees, independent contractors, partners, and directors. Fringe benefits could also include payments or other benefits for not performing services, such as under a covenant not to compete, for example. Provider of Fringe Benefits The company or person for whom you perform services (your employer or the company that contracts you) is considered the provider of the fringe benefits and is responsible for including the fringe benefits in your compensation and withholding income tax. This is the case even though the benefits themselves may be furnished by a third party, such as an insurance company or health care provider, or one of your employer’s customers or clients, for instance. And, as the person who is performing the services, fringe benefits provided to a
