Fringe benefits, am I on the hook for this tax money?

Question

Been working for my company for almost 3 years, it offers a complimentary gym membership, no cost to the employee. Just found out today that They are now taxing this benefit, and its retroactive. Not sure if its to when I joined, or when this tax kicked in. I was NEVER notified that I would be taxed for the gym, now they are telling me that I owe 1400. This amount will be added to my net worth. This seems really wrong to me, being that my employer didnt tell me anything until now. Do I have any legal options, or what can I do with this? Is there something in writing saying the employer has an obligation to let employees know this? Appreciate any help..

Answer 1

Many fringes are taxable income. As such the amount will be added to your W-2, not your net worth, and you'll pay tax on the amount as if you had received it in your paycheck. It doesn't mean you'll owe $1400 - if that's what's added to your W-2 you'll owe TAX on that amount which is that amount times your tax bracket.

You might be able to opt out of the membership for the future. But for the time you've already had the membership, you're stuck. No, there's no law that your employer has to explain tax law to you, and this is a matter of tax law.

Answer 2

The tax is not new, likely your employer got audited and busted for not claiming this properly. You will only owe the taxes on $1,400(if that is the value, not the tax, which makes sense because that would be about $40 a month), which at very worst will likely be around $392 (that is if you are in the 28% tax bracket, which is not likely the case if you are this concerned by it). Your employer should tell you that this is how it is handled, but ignorance is no excuse in the eyes of the law. And there is nothing binding them to tell you how you are supposed to do your taxes.

Answer 3

Nothing in life is free.

Leased cars are compensation; so are "free" gym memberships. The value will be added to box 1 of your W-2 and will be subject to all appropriate taxes.

By the way, if the gym membership is worth $100 a month, you won't owe $1200, just the tax on the $1200.