Seven Tax-Efficient Perks to ask your Employer For
The day and age of employer/employee loyalty is long gone. No longer do people finish school, and work their entire career at the same company, retiring with full pension and benefits for life.
In fact, the average person will not only change employers, but careers entirely approximately eight times before reaching age 50. Combine that information with layoffs and downsizing on the employer side, and “tenure” becomes a thing of the past.
As competent and dedicated employees, you can use this to your advantage though. If you are doing a good job, your employer will want to keep you. And to do so, they know they might need to woo you or otherwise entice you to stay if your skills are marketable and you are in demand.
Here is a list of things you can try asking your employer for, either at the negotiation table before you take a new job, or at an annual review when you have demonstrated that you are an excellent employee:
This is of course the tried and true way of being compensated and appreciated for your services. Unfortunately though, it’s also the hardest to get and the worst for your taxes. The higher your income, the more tax you pay, and sometimes a small raise to the next tax bracket can even mean less take-home pay than before. Following are a few other suggestions that may carry more bang for your buck.
Pay for Education
It is in your employer’s best interest to have educated employees who are seeking further knowledge in their profession. Education can take the form of on-line courses, part-time university or college credits, or professional courses. Professional certificates in your line of work can not only mean more marketable skills, but higher pay. So you may end up getting that raise after they pay for your education anyway.
The beauty of getting your employer to pay for courses is that the cost of the course is deductible to your employer, and rarely shows up on your pay stub as a taxable benefit. It’s like free money (as long as you are willing to put in the work of studying).
Another way to get more value out of your job is to ask for an enhanced benefit program. Maybe this will look like a lower deductible on your health care claims, or a better split in premiums if you pay part. Maybe they will enhance your Disability Insurance plan (but beware of the tax consequences of them paying for it entirely).
If you have a work place with flex hours or the ability to work from home, you can ask for toys to help you do your job when you’re not in the office. These toys can take the form of a cell phone or PDA (with a fully-funded plan of course), laptop, internet service at home, or any other relevant services you can legitimately use for work but that might also enhance your personal life. And because it is the cost of doing business, rarely if ever will you be taxed for it.
Some employers will dole out car or gas allowances for their employees. It could come in the form of additional pay, but often takes the form of a company credit card or reimbursement plan. If it is the latter, it again usually allows you to avoid additional taxation as it’s considered a company expense not an employee-related expense.
Better Pension/Retirement Benefits
You can request a matching program (if you contribute “x” percent or dollars, then they will match it in totality or up to “y”), or you can ask simply for better employer-funded coverage of your retirement or pension plan if such a company plan already exists.
This is a sticky area, and should be approached with caution. However if you have a good relationship with your employer and they want to keep you, you could consider being taken off the payroll as a salaried employee and added instead as a contract employee. Technically this means you are self-employed, and can now deduct any expenses that you personally incur to earn your income. This includes transportation (car, gas, repairs, public transportation), home office supplies and equipment, and a myriad of other miscellaneous items depending on your line of work.
The down side to this is that if down the road the company needs to lay off employees, you will be the most expendable since they don’t have to give you severance pay, or when the contract is up they can let you go with little or no notice, depending on the terms.
Consult your accountant or tax-preparer before going down this road, but if it is done properly it can save you lots of dough in taxes and be quite lucrative.
And, if your employer is unwilling to budge, or you are looking for a new career and want to go where the money is, here is a link to the Top Ten List of Majors With The Highest Salaries.
Employers aren’t stupid. If you don’t ask for (or demand) extra perks, then rarely will they volunteer them to you. Just like asking for a discount, the worst they can say is “no”. You’ll never know unless you ask!