Tax withholdings are deducted or applied at the time the loan repayment is made. Tax withholdings may not be spread out over time.
The deduction for employment tax withholding reduces the maximum loan repayment.
Example: If you grant a benefit of $6,000 and your employee's tax deductions are $2,000, then the actual loan payment to the loan institution is $4,000. However, the fully approved benefit amount of $6,000 counts toward the maximum benefit limitations.
Easing Tax Liability
In an effort to ease the tax liability to employees receiving this benefit, you may have:
NFC make smaller payments at periodic intervals through the fiscal year or subsequent years, rather than issue one lump sum;
Your employee write a check to MRP to cover the tax liability rather than have it withheld from your employee's pay check;