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Nonprofit Law/Salary and benefits (501 c3)

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Question
Hello,

I would like to please know if a staff member of a 501 c3 foundation, who operates abroad, can be given US health insurance and airfare (to come back to the US once a year, and to be covered if needed during this trip home) on top of/apart from her salary?
Also, are these benefits tax deductible for the employee and employer?
Finally, can the employee be given benefits (health insurance, airfare, etc) for a family member or dependent child?

Thank you very much!

Best wishes,

J.

Answer
A 501(c)(3) organization may provide to employees fringe benefits such as US health insurance and airfare (to come back to the US once a year, and to be covered if needed during this trip home)as long as the value of those fringe benefits added to the salary is not more than what is reasonable.  Starting on pdf page 10 of www.irs.gov/pub/irs-tege/eotopici93.pdf the IRS discusses many of the factors it would look at to decide whether a salary is reasonable.

Those expenses are deductible by the employer as compensation expenses. I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations and the part of your question about whether the benefits are taxable to the employee is about individual employee tax liability and does not effect the organization's exemption. But I will direct you to the IRS Publication 15-B which discusses fringe benefits and is available at http://www.irs.gov/pub/irs-pdf/p15b.pdf and note from page 3, column one, "Any fringe benefit you [employers] provide is taxable and must be included in the recipient's pay unless the law specifically excludes it."  You can look down that publication to see if the particular fringe benefits you refer to are excluded from income of the employee.  

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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