Ad Pitch You Needn’t Subscribe to

Question: For about a month now, I have been getting letters from every magazine I have ever subscribed to (and from some I’ve never even heard of before) urging me to renew my subscriptions for several years in advance. The letters all cite the new tax law, pointing out that subscriptions won’t be deductible after this year. I’m tempted to renew some of my work-related magazines for as long as I can, even though it will mean a big out-of-pocket expense. But I’m wondering if taking such big one-time deductions is really legal as the magazine publishers insist. Do you know?--L. L.

Answer: You were right to be skeptical. In response to all of those recent advertising come-ons by magazine publishers, the IRS earlier this month issued a notice that it won’t allow full deductions for multiyear subscriptions to magazines and other professional publications.

The IRS said that for the 1986 tax year, it will allow taxpayers to deduct only the cost of the first year’s subscription. Beyond that, “the deductibility of amounts for the remaining life of a multiyear subscription will depend on the federal income tax deduction rules applicable to the tax year involved,” the IRS announcement said.

It won’t be impossible to deduct expenses for magazines and other publications after this year. But it will be much more difficult because the new tax code severely restricts tax writeoffs of employee business expenses, which is how magazine subscriptions are classified. But as the IRS notice makes clear, trying to rush through one last large tax deduction by prepaying for several years won’t be allowed.

Q: My son and I are having a debate over fringe benefits, and we hope you can settle it for us. He says fringe benefits add up to just as much income for the average worker as salary does. I say wages account for at least twice as much as fringe benefits. Who’s right?--B. T.

A: Both of you can make convincing arguments,but there are probably more studies siding with you.

The National Assn. of Temporary Help, which conducted a study on fringe benefits earlier this year as part of its drive to show employers the merits of hiring temporary workers instead of full-time employees, says company-paid benefits add about $15 to an employer’s payroll for every $100 of salary. So by that group’s figuring, fringes account for about 13% of overall employee compensation.

The U.S. Chamber of Commerce came up with higher numbers for fringes when it studied member companies’ payrolls for 1985. Even so, the average for fringe benefits still totaled less than half of overall compensation.

On average, the chamber found, companies paid $8,166 per employee for fringe benefits in 1985. That came out to about 40% of the average employee’s overall compensation.

The range was $3,500 to $13,000 per employee, which works out to 18% to 65% of each employee’s overall compensation.

Debra Whitefield cannot answer mail individually but will respond in this column to financial questions of general interest. Do not telephone. Write to Money Talk, Los Angeles Times, 780 Third Ave., Suite 3801, New York, N.Y. 10017.