Fringe Benefits and Tax Implications for Employers
Discover the ins and outs of fringe benefits, including what is considered taxable, non-taxable options, cafeteria plans, and conditions under which fringe benefits may not be subject to taxes. Learn about de minimis benefits, documentation requirements, and exemptions for specific types of benefits offered to employees. Navigate the complexities of providing benefits to your workforce effectively while staying compliant with IRS regulations.
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Presentation Transcript
Supplements C-E What are Fringe Benefits? Form of Pay for or related to Services Does not have to be your employee Subcontractor Family member of employee Client You are the provider of the Benefit You may or may not be the DIRECT provider
Taxable? Any benefit that is provided IS taxable unless specifically excluded by law Cash or Cash Equivalents are ALWAYS Taxable De Minimus may not apply due to frequency or expectation Thanksgiving Turkey Value is Fair Market Value or the amount paid whichever is greater
Cafeteria Plans Written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. Accident and Health Insurance Plans Adoption Assistance Dependent Care Assistance Group Term Life Insurance Health Savings Accounts for Long term care insurance premiums
Taxable or Not? If certain conditions are met the fringe benefit provided may not be taxable. DOCUMENTATION is a must Authorization is a must The following examples are limited and further review might be needed.
Fringe Benefits not Taxable - IF Achievement Awards Athletics Facilities De minimis ** Educational Assistance - up to $5250 per year Employee Discounts Employer Provided Cell Phones Lodging on premises
Fringe Benefits not Taxable - IF Meals Moving Expense Reimbursement - meals not included No Additional Cost Services ** Transportation Benefits - local travel, transit pass Tuition Reduction - educational organization only Working Condition Benefits - property/services provided to employee so they can perform their job
De Minimis Cash or Cash Equivalents are always taxable! Occasional Personal use is not taxable Holiday gifts with low fair market value Meals - low fair market value and infrequent or for employer convenience Occasional Parties and Picnics for Employees and families Occasional tickets that do not meet the No Additional Cost
No Additional Cost Services provided to employee that doesn t cause the employer any substantial additional costs Tickets due to excess capacity (airline, bus, etc.) Athletic Facilities Employee Discounts 20%
Exceptions Employer Provided Cell Phones Need to contact employee Requirement to be available to clients Meals Occasional or of little value For convenience of employer
Exceptions Lodging on Your business premises Furnished on your business premises Furnished for your convenience Must accept it as a condition of employment Different Test Apply to Educational Institutions Section 119(d) Does not apply if the employee has a choice to receive Lodging or pay in lieu of
Vehicles/Cell Phone Lease FMV Mileage Log must be maintained Reportable and Personal Use is taxable Car Stipend Set amount each month. Taxable Cell Phone Taxable Cash stipend Parking - $210.00 per month, Transit passes - $130.00
Disclaimer This presentation is not intended to be all encompassing but only an overview of some of the items/situations that arise and is for discussion purposes only. For a more detailed analysis of a particular situation please feel free to contact me at any time. Andrea Scheuering 406.243.5199 andrea.scheuering@mso.umt.edu Thank you for attending!
