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.

You pay taxes

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

@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

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....

I see now- the deduction varies per pay check.

@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)

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?

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

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

Ah okay. Makes sense. Thanks!

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

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)

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?

Hypothetically, of course 😜

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