{"id":23475,"date":"2023-04-01T00:00:52","date_gmt":"2023-04-01T00:00:52","guid":{"rendered":"https:\/\/todaysveterinarybusiness.com\/?p=23475"},"modified":"2023-04-04T01:28:08","modified_gmt":"2023-04-04T01:28:08","slug":"employee-discount-money-matters-0423","status":"publish","type":"post","link":"https:\/\/navc.sitepreview.app\/todaysveterinarybusiness.com\/employee-discount-money-matters-0423\/","title":{"rendered":"Few Good Deeds Go Untaxed"},"content":{"rendered":"

Employee discounts on services and products are a popular fringe benefit in the veterinary industry. After all, veterinarians want all animals to receive the care they need, and since most team members have pets, the discounts are highly utilized, though the markdown can vary widely from practice to practice. Employee discounts, however, can lead to tax implications. So how did such a simple and generous concept become so fraught?<\/p>\n

Let\u2019s start with the IRS. I know the Internal Revenue Service<\/a> is the last thing you want to think or read about, so I\u2019ve done the work for you. The upshot: You can offer any discount you like, even $15,000 worth of free services to every employee. The IRS doesn\u2019t care. (By the way, I care as a practice consultant, so don\u2019t do it!) What the IRS does care about, though, is receiving tax dollars on that free or discounted care.<\/p>\n

At a certain level, employee discounts become taxable income to the staff. To stay off the IRS radar, you may offer up to a 20% discount on veterinary services and charge essentially your cost plus 10% on products. Those discounts are between you and the staff.<\/p>\n

However, go beyond those discounts and the difference is taxable income to the employee and subject to payroll tax and income tax withholding. Taxable discounts are reported through payroll and appear on an individual\u2019s W2. (Verify that your payroll company can adequately account for taxable fringe benefits. Some can\u2019t.)<\/p>\n

I know what you\u2019re thinking.<\/p>\n