I am asking one of my friends who works at apple to help me order a new iPhone. Since he can use the family and friends discount . However, I have been told, he needs to pay income tax for the amount FF discount saved. So he is going to change me 50 dollars more in addition to the final price. I never heard about it. Does anyone know if this is true?
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iPhone Does anyone know if apple employee need to pay income tax for the amount family and friends discount saved?
- Thread starter Ask009
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That doesn't sound right to me. I don't know Apple's policy on this, so I can't say with certainty.
How does this work - does he actually purchase it, and then resell it to you? Or if it is a family and friends discount, then do you end up purchasing yourself from Apple, with the purchase essentially sponsored by your friend?
How does this work - does he actually purchase it, and then resell it to you? Or if it is a family and friends discount, then do you end up purchasing yourself from Apple, with the purchase essentially sponsored by your friend?
He bought it and I paid back to him. Only thing is he ask me more money than what is on the receipt. He told me because he needs to pay for the income tax for the FF discount amount saved, that's why he charges me more
Not illegal. Nothing illegal about selling something for a profit. The only issue here is whether or not the friend is being honest, or is making up a reason for charging more.
Ultimately if the friend insists that this is the case, then the OP will have to decide whether or not it is worth it to confront him and challenge what he's done. It may not be worth the harm it will cause to the friendship, although the quality of the friendship is already damaged, it would seem.
If Apple's policy with it's employees is as the friend has stated, then there would be documentation on Apple's internal website that only employees have access to, but they will certainly be clear in how these purchases can be made and what the terms are for the purchase. If taxes are paid on the discount then that would be made clear in writing. Ultimately that will be the best way to get the facts.
The IRS don't care about discounts. Period.
He is either scamming you or is totally misguided.
Besides, if there was a tax liability it would be totally dependent on the tax payers situation. For $50 it would probably have to be several hundred dollars difference.
https://en.wikipedia.org/wiki/Internal_Revenue_Code_section_132(a)
Guess I'm wrong. Federally anyway.
Well, I am not a tax lawyer, and I don't suppose that you are one either, but a company can collect tax on something, or not collect tax on something, but at the end of the year it is all reported and then your tax filing will ultimately be where everything will need to be properly identified and any tax payment owed will be made or not made. So the company can over-withhold, or under-withhold, but that is not something that is 'legal' or 'illegal' in my opinion. What is required is that they report any taxable amounts and then you file your taxes with those elements all properly identified and accounted for. The company does have responsibility to be reporting these things in accordance with the regulations.
As I'm sure you know, companies collect tax on the behalf of the government, the money goes to the government and is not held by the company, so it's not like Apple or anyone else is 'collecting tax' and then holding on to it.
The wiki page is helpful, thanks.
Bottom line here seems to be what we are all basically saying, that the guy is charging his friend $50 and giving an explanation for it that is not true.
The federal and state governments absolutely determine what is legal with regards to tax withholdings. It just so happens that I was incorrect by inferring that withholding taxes on employee was illegal.
That's quite inaccurate. I am also an Apple employee myself and I pay income taxes for the amount of discount I take, as it is considered (in many countries) income and it is therefore taxable. The tax is mentionned in the payroll and usually paid few months after purshase. Depending on how much taxes % the guy pays, $50 makes sense for me.
People confirmed that the Product Discount Tax line on the paystub is Apple reimbursing the taxes on it; it's a credit, not a deduction. While legally, we have to pay tax on the discount, Apple pays us extra on our paycheck to cover that extra charge. It evens out by the time taxes are filed.
For OP, yes, at least in the US, employees are taxed for the discount, but Apple reimburses for that expense and covers the difference. Have your friend check their paystubs and notice that the Product Discount Tax line is a credit that is being payed to them, not deducted, and the expense evens out without you or them owing anything extra. While some of that Product Discount Tax credit is deducted in state, fed, Social, and Medicare taxes, the rest is used to cover the Qualified Employee Discount tax.