A Practical Guide to IRS Code Section 125
Understanding employee benefit deductions can feel overwhelming, especially when tax regulations are involved. The most widely overlooked regulations can be IRS Code Section 125 . This tax code plays an important impact on how employers and employees manage the administration of healthcare benefits and other eligible ones as well as reducing tax-deductible income. This article will explain what it does, why it's important, and how section 125 deduction affects the daily payroll decision-making. Understanding IRS Code Section 125 IRS Code section 125 is one section that is part of the Internal Revenue Code that allows employees to pick between tax-deductible income, or certain qualifying benefits, without having to pay tax upon those benefits. They are also referred to as cafeteria plans since employees have the option to "select" benefits that best meet their requirements like choosing options from an assortment of menu items. The most important characteristic that is u...