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Tax Deduction Consulting: S125 Deduction Goffstown NH

A cafeteria plan is a common name for a benefits program that offers an employee a choice among several different forms of benefits. These benefits include life insurance, medical insurance, and child care payments. The idea is that the employee receives a certain amount of compensation in the form of a fund used to "shop" at the benefit cafeteria rather than as wages.

Mr. James E. Knee (RFC®), MBA
(603) 224-1010
6 Loudon Road, Suite 505
Concord, NH
Company
Sterling Financial Services, LLC
Qualifications
Education: B.S., University of Bridgeport;MBA, Southern New Hampshire University;Advanced Certificate in International Business;Series 24 Registered Principal License;Series 7 and 63 Securities License;NH Health and Life Insurance License
Years of Experience: 26
Membership
IARFC, FPA
Services
Invoice, Estate Planning, Pension Planning, Retirement Planning, Tax Planning, Tax Returns, Seminars Work, Employee Benefits, Education Plan, Asset Protection

Data Provided by:
Fishers Income Tax Svc
(603) 622-2057
616 Mast Rd
Manchester, NH

Data Provided by:
Danis & Company
(603) 656-9041
169 South River RD #14
Bedford, NH
 
J Walker & Co LLC
(603) 224-4829
104 N State St
Concord, NH
Hours
Mon 09:00 AM-05:00 PM;Tue 09:00 AM-05:00 PM;Wed 09:00 AM-05:00 PM;Thu 09:00 AM-05:00 PM;Fri 09:00 AM

Data Provided by:
Mr. James E. Knee (RFC®), MBA
(603) 224-1010
6 Loudon Road, Suite 505
Concord, NH
Company
Sterling Financial Services, LLC
Qualifications
Education: B.S., University of Bridgeport;MBA, Southern New Hampshire University;Advanced Certificate in International Business;Series 24 Registered Principal License;Series 7 and 63 Securities License;NH Health and Life Insurance License
Years of Experience: 26
Membership
IARFC, FPA
Services
Invoice, Estate Planning, Pension Planning, Retirement Planning, Tax Planning, Tax Returns, Seminars Work, Employee Benefits, Education Plan, Asset Protection

Data Provided by:
H&R Block
(603) 647-6974
1328 Hooksett Rd
Hooksett, NH

Data Provided by:
H&R Block Inside Northside Plaza
(603) 628-1976
67 HAMEL DR UNIT B4A
MANCHESTER, NH

Data Provided by:
Devereaux & Ean-Dixon Bookkeeping LLC
(603) 717-1214
PO Box 2794
Concord, NH
Prices and/or Promotions
10% off of individual tax return prep

Steele Associates
(603) 673-4660
54 Nashua St
Milford, NH

Data Provided by:
Charles W Broughton & Co
(603) 934-5241
800 Central St
Franklin, NH

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Tax Deduction Consulting: S125 Deduction

S125 Deduction

Section 125 of the Internal Revenue Code permits employers to establish cafeteria plans as a means of providing employee benefits.

A cafeteria plan is a common name for a benefits program that offers an employee a choice among several different forms of benefits. These benefits include life insurance, medical insurance, and child care payments. The idea is that the employee receives a certain amount of compensation in the form of a fund used to "shop" at the benefit cafeteria rather than as wages. This ability to pick and choose exactly what benefits you want is where the name cafeteria originates.

Since the amount of compensation that is given in lieu of wages is actually a form of earned income, it is of interest to the Internal Revenue Service. Section 125 of the IRS code gives the regulations that govern a cafeteria plan and explains the tax implications. At the current time, the IRS allows a $5000 deduction or exclusion from taxable income for a participant in a cafeteria plan under section 125. This is reduced to $2500 for a married couple filing separately.

On the other hand, payments to a fund used for cafeteria plan benefits that exceed $5000 must be reported by the employer as income on form W-2. The cafeteria plan has many good points. The fact that each employee is given a chance to select between options and structure his own benefits package to best cover his own needs is an important factor in their popularity. The ability to exempt the cost of up to $5000 of compensation from taxes is another factor.

In a normal employer benefit program, the individual employee must pay for his benefits with actual taxable income. Although there are always ways to later claim certain portions of this as deductions on your tax return, but many benefits are not deductible or they have limits such as the 7.5% of adjusted gross income starting point for medical deductions.

The qualified benefits paid under a cafeteria plan are gen...

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