Business Tax Recovery Logo


Tax Deduction Consulting: S125 Deduction Washington DC

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.

Joseph Bonaccorsy
2011 Crystal Dr.
Arlington, VA
Company
Title: Financial Advisor
Company: Core Advisory, LLC
Type
Registered Investor: Yes
Education
Florida Tech /CFP
American Intercontinetal/BA - Maga Cum Laude
Institute of Business Finance/MSFS
Years Experience
Years Experience: 15
Service
Wealth Management,Life Insurance,Investment & Portfolio Management,Long-Term Health Care Planning,Annuity Ideas & Strategy Planning,Planning For Personal Finances & Budgeting,Retirement Income Accumulation Planning,Business Income Tax Planning,Fee-Only Comprehensive Financial Planning,Stock Market Alternative,Disability Insurance,Retirement Planning,Real Estate Investment Planning,Commission-Only Financial Planning (Full Disclosure),Insurance & Risk Management Planning,Retirement Income Distribu

Data Provided by:
Barbara J. OLeary (RFC®), CEP
(703) 370-7666
101 South Whiting Street Suite 203
Alexandria, VA
Qualifications
Years of Experience: 18
Membership
IARFC, NICEP
Services
Invoice, Estate Planning, Portfolio Management, Retirement Planning, Tax Planning, Tax Returns, Employee Benefits, Stocks and Bonds, Mutual Funds, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, Healthcare Accounts, Compensation Plans

Data Provided by:
B. Frank Doe (RFC®), CFP, MBA
(703) 272-7177
10560 Main Street, Suite 316
Fairfax, VA
Company
Frank & Darby Doe
Qualifications
Education: MBA
Years of Experience: 33
Membership
IARFC, FPA
Services
Invoice, Estate Planning, Business Planning, Retirement Planning, Tax Planning, Tax Returns, Mutual Funds, Annuities

Data Provided by:
Jackson Hewitt
(202) 588-1885
251 Florida Avenue
Washington, DC

Data Provided by:
Ari Group Llc
(202) 723-5059
1731 7th St Nw
Washington, DC

Data Provided by:
Charles Stough
1940 Duke St, Suite 200
Alexandria, VA
Company
Title: LPL Wealth Planner
Company: WealthPath LLC
Type
Investment Advisor Rep: Yes
Education
University of Oklahoma/MHR
University of Florida/BA
Years Experience
Years Experience: 7
Service
Pension for Highly Compensated Owners,Income for Life/ Preserve Principal,Alternative Investments,Retirement Planning,Long-Term Health Care Planning,Business Succession & Liquidation Planning,Estate Tax Planning,Asset Protection Strategies & Planning,Hourly Financial Planning Engagements,IRA, 401k, Roth IRA, QDRO Rollovers,Wealth Management,Annuities,Alternative Asset Class Planning,Annuity Ideas & Strategy Planning,Planning For Personal Finances & Budgeting,Retirement Income Accumulation Planni

Data Provided by:
Mr. Vijay K. Khetarpal (RFC®), CFP, CHFC, CLU
(703) 356-4888
8607 Westwood Center Dr #300
Vienna, VA
Company
Integrity Financial Group, LLC
Qualifications
Education: B.A (Honors) Economics, St. Stephens College, DelhiAll India HS Humanities, Mayo College, Ajmer
Years of Experience: 27
Membership
IARFC, MDRT, FPA, SFSP, NAIFA
Services
Invoice, Estate Planning, Business Planning, Pension Planning, Executive Compensation Planning, personal Coach, Retirement Planning, Tax Planning, Employee Benefits, Stocks and Bonds, Mutual Funds, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, Group Insurance, Education Plan, Healthcare Accounts, Asset Protection, BuySell, Compensation Plans

Data Provided by:
Mr. Martin J. Beeson (RFC®), CEP, CSA
(866) 388-0110
2135 Defense Hwy Ste 6
Crofton, MD
Company
The Planning Companies
Qualifications
Years of Experience: 19
Membership
IARFC, NICEP
Services
Invoice, Estate Planning, Pension Planning, Executive Compensation Planning, Retirement Planning, Tax Planning, Seminars Work, Employee Benefits, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Charitable Planning, Education Plan, Healthcare Accounts, Charitable Foundations, Asset Protection, BuySell

Data Provided by:
Atab Tax Service
(202) 829-2822
536 Columbia Rd Nw
Washington, DC
 
Multistate Tax Commission
(202) 624-8699
444 N Capitol St NW Ste 425
Washington, DC

Data Provided by:
Data Provided by:

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...

Click here to read the rest of this article from BusinessTaxRecovery.com