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Financial counseling isn’t a tax-free perk

by on
in Employee Benefits Program,Human Resources

Q: My employees sometimes ask my advice about their personal financial affairs. That got me thinking about offering financial counseling from an outside firm as an employee benefit. Can this be offered as a tax-free fringe benefit? C.O., Detroit, Mich.

A: Sorry. The value of employer-paid financial planning services is generally taxable to employees. If the services represent tax or investment counseling, employees can deduct the costs as miscellaneous expenses, subject to the usual 2 percent-of-adjusted- gross-income floor. (IRS Revenue Ruling 73-13) Tip: If your company offers a retirement plan, it can offer certain retirement-planning services to employees tax free, including retirement-planning advice and information about how the plan fits into an individual's overall retirement income.

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