“pseudo compensation” can reduce taxable income and optimize client outcomes.
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quick tax tip
with art werner
cpe today
in this episode of quick tax tip, tax planning authority art werner makes a compelling case for rethinking how accountants approach compensation—shifting the focus from traditional deductions to strategic use of fringe benefits.
“what are we really trying to accomplish?” werner asks. “we’re trying to create what i call pseudo compensation—benefits that meet a client’s needs and reduce, or even eliminate, taxes.”
the key, he explains, is designing tax-efficient strategies that align with today’s post-tax cuts and jobs act environment. with many itemized deductions reduced or eliminated and the standard deduction nearly doubled, relying on deductions to save on taxes has become far less effective.
instead, werner encourages advisors to turn their attention to reducing taxable income. “the idea of the fringe benefit is to say: let the company pay for something i would otherwise pay for with after-tax dollars,” he says. “i’ll take lower cash compensation, as long as i walk away with a benefit that i’m not being taxed on.”
it’s a concept that speaks to a larger shift in how tax professionals must navigate compensation planning. fringe benefits—such as employer-paid health insurance, retirement contributions, transportation subsidies, or educational assistance—can be powerful tools in an accountant’s advisory arsenal.
by reframing fringe benefits as intentional, strategic components of compensation packages, werner helps practitioners better serve clients seeking both financial efficiency and practical value.
whether you’re guiding business owners, high-income individuals, or startup founders, this episode delivers a timely reminder: smarter compensation doesn’t always mean more money—it means less tax.
originally published july 17, 2024.
2 responses to “art werner: tax-savvy fringe benefits | quick tax tip”
art werner
joe, thank you for your comment. i look forward to having you at the seminar, and i hope that you will feel comfortable asking me questions and providing insights and experiences.
joe mastriano, cpa
reducing deductions outside the itemized list is still very viable. however, i am interested in fringe benefits that can be controlled by small business corps and employees. i look forward to your seminar.