6 tax-efficient perks to ask for at work
Posted
Dec 27 2007, 11:27 AM
by
Karen Datko
This post comes from Nora Dunn at partner blog Wise Bread.
The days of employer/employee loyalty are long gone. No longer do people finish school and work their entire career at the same company, retiring with full pension and benefits for life.
In fact, the average person will change not only employers but also careers multiple times before reaching age 50. Combine that information with layoffs and downsizing on the employer side, and "tenure" is a thing of the past.
As a competent and dedicated employee, you can use this to your advantage. If you are doing a good job, your employer will want to keep you. And to do so, your company knows it might need to entice you to stay if your skills are marketable and you are in demand.
Higher pay is the tried and true way of being compensated and appreciated for your services. Unfortunately, it's also the hardest to get and potentially the worst for your taxes. The higher your income, the more tax you pay, and sometimes a small raise to the next tax bracket can mean less take-home pay.
The following are perks you can ask for at your annual review, or at the negotiation table before you take a new job, that might carry more bang for your buck.
Continuing education. It is in your employer's best interest to have educated employees who are seeking further knowledge in their profession. Education can take the form of on-line courses, part-time university or college credits, or professional courses. Professional certificates in your line of work can mean not only more marketable skills, but higher pay. So you may end up getting that raise after your employer pays for your education.
The beauty of getting your employer to pay for courses is that the cost of the course is deductible to your employer, and rarely shows up on your pay stub as a taxable benefit. It's like free money, as long as you are willing to put in the work of studying.
Enhanced benefits. Another way to get more value out of your job is to ask for an enhanced benefit program. This could include a lower deductible or lower premiums for your health insurance. Maybe your employer will enhance your disability insurance plan (but beware of the tax consequences if your employer pays the entire cost).
Toys. If you have a workplace with flex hours or that allows you to work from home, you can ask for toys to help you do your job when you're not in the office. These toys can include a cell phone or PDA (with a fully funded plan, of course), laptop, Internet service at home, or any other relevant services you can legitimately use for work that also might enhance your personal life. Because it is the cost of doing business, rarely if ever will you be taxed for it.
Car allowance. Some employers will dole out car or gas allowances for their employees. It could come in the form of additional pay, but often might be a company credit card or reimbursement plan. If it is the latter, it usually allows you to avoid additional taxation because it's considered a company expense.
Better pension/retirement benefits. You can request a matching program -- if you contribute "x" percent of dollars, the company will match it in totality or up to "y" -- or you can ask for better employer-funded coverage of your retirement or pension plan if such a company plan exists.
Contract employment. This is a sticky area, and should be approached with caution. However, if you have a good relationship with your employer, you could consider being taken off the payroll as a salaried employee and added instead as a contract employee. Technically this means you are self-employed, and can now deduct any expenses you personally incur to earn your income. This includes transportation (car, gas, repairs, public transportation), home office supplies and equipment, and a myriad of other miscellaneous items depending on your line of work.
The downside is that if the company needs to lay off employees down the road, you will be the most expendable since the company doesn't have to give you severance pay. When the contract is up, the employer can let you go with little or no notice, depending on the terms.
Consult your accountant or tax preparer before going down this road. But if it is done properly, it can save you lots of dough in taxes and be quite lucrative.
If your employer is unwilling to budge on benefits, or you are looking for a new career and want to go where the money is, here is a link to a list of top 10 majors with the highest salaries.
Employers aren't stupid. If you don't ask for (or demand) extra perks, then rarely will they volunteer them to you. Just like asking for a discount, the worst they can say is "no." You'll never know unless you ask.
Other articles of interest at Wise Bread:
"I shouldn't have to pay for this! A consumer's guide to your rights"
"A guide to credit card fees -- hidden and otherwise"
"Six boneless dishes for the hot wing crowd"
