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What are the tax benefits of offering life insurance?

Companies who meet the non-discrimination requirements for life insurance can generally exclude the cost of up to $50,000 for group-term life insurance from the wages of an insured employee.

The company can also exclude the same amount from the employee's wages when calculating the employee's social security and Medicare taxes. Lastly, the company does not have to withhold federal income taxes or pay the Federal Unemployment Tax on any group-term life insurance you provide to an employee.

However, if the cost of the company's group-term life insurance is more than $50,000 worth of coverage, the company must include it in your employee’s wages—minus the amount the employee paid toward the insurance.

For more information, check out the IRS website's section on taxing fringe benefits :

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