{ "media_type": "text", "post_content": "I JUST noticed the well-being subsidy deduction on my pay stub of $21.14. I didn't realize that well being subsidy was something we paid for.", "post_id": "58c9545d3e331400104f9ab1", "reply_count": 20, "vote_count": 3, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting", "feed_type": "crowd" }
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I JUST noticed the well-being subsidy deduction on my pay stub of $21.14. I didn't realize that well being subsidy was something we paid for.

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Posting as :
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You pay taxes

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How would the income tax paid on it exceed the amount of the benefit?

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@D5: So in your example, effectively, Deloitte adds $50 to your salary, from which it deducts $12ish or whatever for taxes (using 25% tax rate for simplicity's sake). You come out in the end having paid $62 for your $100 item

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It's a taxable benefit....you pay income tax on the whole 500 if you use all 500 in the year...if you use 2 dollars you pay income tax on the 2 dollars a year....

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I see now- the deduction varies per pay check.

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@D5: It's tax on the "free" money Deloitte is giving you for the subsidy when you use it, not the tax on your purchase. So in reality it's not effectively a 50% discount, it's more like a 38% discount (still nice though)

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But the income tax you pay over the course of the year exceeds the amount of the benefit- what's the point of having the subsidy?

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It's really ingenious on Deloitte's part. To employees it is no different than our base salary - when we use it we get taxed on it like income. However to Deloitte, it is probably a tax savings initiative as well as it is not included in your base salary therefore doesn't impact bonuses and compensation boosts

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Whenever you use the subsidy, the taxes for the amount you just used are taken from your next paycheck

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Ah okay. Makes sense. Thanks!

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I've read the email several times and could never figure it out. Thanks so much for the clear explanation!

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Btw, this is the same way it works whenever any expense reimbursement is "not grossed up" (whereas when grossed up, the firm is covering the tax as well -- using the $50 example the firm would give you $67 and withhold $17 in tax so you net out $50)

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So next year, if I buy an Apple Watch for $1000 and then submit for reimbursement and then return the Apple Watch, I'll net $375 assuming a 25% tax rate?

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Hypothetically, of course 😜

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How is the $21.14 calculated? I pay that per pay check? $21.14 per pay check comes out to more than the subsidy is worth to begin with.

Zeroed out my wellness subsidy with a massage on March 6th after year end. Btw, I had the same question as OP and this is the first time that the explanation made sense!

What if you don't submit the tax for reimbursement? Do i still pay taxes on it? If i buy something for 100, pay 106 (inc tax), and submit 50 for reimbursement?

Then you get taxed on 50$.. it's a taxable benefit it gets added to your taxable income. It's not a recurring thing lol it's just when you claim you'll see your income increased by that much on a paycheck or two later.

They send an email prior to the deduction that explains too. It's probably buried in your inbox somewhere

I mean aren't you supposed to buy it with your Corp card, so wouldn't the refund go back on it as well? I assume they look much more closely at personal card expenses that big

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