Question....Cellphone

[naggie1972]

DH gets 24.23 per week for his cell phone, so 48.46 per pay and he gets paid every other Fri. This money is taxed. However he spends marginally more than that every month, not much. I haven't figured it out I just know that just for his cell plus minutes and data it is a little bit more than that but not much.

So that is 1259.96 that is added to our salary and taxed on. I reckon (just doing quick numbers) that his portion of the cell phone bill is approx. 1680.00 a year.

Is there anything we can do tax wise with that, is it normal for a company to pay for a stipend for a cell phone and it is included in the salary.

Forgot to add that our 3.05 over the standard 50k core life (the company pays for 1x your salary but DH salary is more than 50k) is also added to gross income.

This is a company that taxes a 25.00 grocery store gift card...LOL

What about the internet bill? Any tax advice for that, can we put that figure somewhere on out tax return.

What I mean by taxing is that ie salary is 50,000 but with the cell phone stipend and the flex credit the W2 shows a gross income of 53000. (the numbers are not our numbers, just an example.)

[Malarky]

A few years ago, DH's company paid for everything. Healthcare, dental, gas, cellphones, travel and awesome bonuses.

Fast forward, the company was assimilated, DH was moved to an office closer to home and the perks aren't quite as good.

This is the new reality. I miss that they paid a chunk of my bills, but I'm even more grateful that he's employed and covers the big bills in my life. We could live on my salary, but a very spartan existence.

The upside is that I no longer have to pay an accountant to figure it all out for me.

[TheOtherMe]

Any deductible employee business expenses are deducted on Sch A as a miscellaneous itemized deduction and limited to 2% of your adjusted gross income.

Probably means no deduction due to the 2% of AGI limitation.

[naggie1972]

Been doing this for years but still not positive what AGI is and where to find it.

[TheOtherMe]

www.irs.gov/irs/article/0,,id=234371,00.html

Line 4 if you filed a Form 1040EZ
Line 21 if you filed a Form 1040A
Line 37 if you filed a Form 1040

Adjusted Gross Income is defined as gross income minus adjustments to income.

[mwcpa]

"What I mean by taxing is that ie salary is 50,000 but with the cell phone stipend and the flex credit the W2 shows a gross income of 53000. (the numbers are not our numbers, just an example.)"

it seems the cell phone is administered as a non accountable plan, meaning the employee gets a stipend and does not have to "prove" the expense to the employer. maybe see if the employer will set up the cell phone through an accountable plan, where the employee provides a copy of the phone bill, a log of the business and personal calls. it is a lot of work, but an accountable plan would limit the taxable amount to the personal calls on the cell phone.

See IRS publication 535

"Example 1.
Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend.
Kim is being reimbursed under a nonaccountable plan. Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions.
Example 2.
Kevin is paid $2,000 a month by his employer. On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. No part of the $50 a day designated by his employer is treated as paid under an accountable plan. "

"Forgot to add that our 3.05 over the standard 50k core life (the company pays for 1x your salary but DH salary is more than 50k) is also added to gross income."

IRS publication 15-B " You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee"

that is not the employer's choice, that's the law..... but tax on 3.05 is .76 (you are in the 25% bracket), but to earn enough to buy the extra insurance would cost you 4.07 (4.07 less 25% tax = 3.05 needed to buy the insurance) before tax.... so, you pay .76 to save 4.07, good deal in my book....

"This is a company that taxes a 25.00 grocery store gift card"

again, this is the law, not the company's doing.

from IRS publication 15-B again, related to achievement awards being excluded from income, cash is not excluded.

"This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities"

[naggie1972]

Yeah I know it's the law, but we have been given gift cards and movie tickets and not had them as a line item on our pay stub. Just thought it was funny.

[naggie1972]

Thanks theotherme.