FRINGEFRINGE BENEFITS BENEFITS

Examples of Fringes

CASH NON-CASH• AUTOMOBILES• AWARDS,PRIZES • CELLULAR PHONES• EDUCATIONAL

REIMUBURSEMENTS• SAVINGS BONDS• ALLOWANCES• MEAL MONEY

(BASED ON HOURS WORKED)

• GROUP TERM LIFE• MOVING EXPENSES• PARKING• ER PROVIDED

LIVING QUARTERS• CLOTHING OTHER

THAN CERTAIN UNIFORMS

• SPOUSAL TRAVEL• SEASON TICKETS

EXAMPLES OF EXCLUDED FRINGES

• Accident and health plans

• achievement awards

• athletic facilities• de minims fringes• dependent care

asst. programs• educational assist• employee discounts

• Group-term life• lodging on

employer’s premises• moving expenses

reimbursements• no-additional cost

services• tuition reduction• working condition

fringes

TAXATION OF BENEFITS• ALL REMUNERATION, CASH OR NON-

CASH, ARE CONSIDERED GROSS INCOME UNLESS SPECIFICALLY EXEMPT BY LAW. (IRC 61)

• BUSINESS PORTION MAY BE EXCLUDED AS A “WORKING CONDITION” FRINGE BENEFIT...(IRC 132)

• PROVIDED THE RECORDKEEPING REQUIREMENTS OF IRC 274 ARE MET.

Automobiles• PERSONAL USE CONSTITUTES

WAGES

• VALUATION METHODS: Cents per mile ($.565/Mile 2013) Commuter rule ($1.50 each way/day) Annual Lease Valuation

CENTS-PER-MILECENTS-PER-MILE

• FMV of auto must be less than $16,000 for automobile; $17,000 for truck - 2013

• At Least 50 Percent Of Annual Mileage Must Be For Business Use

• Must Be Actually Driven At Least 10,000 Miles Per Year (May Be All Personal Miles)

• Used During The Year Primarily By Employees.

COMMUTER RULECOMMUTER RULE• Must own or lease vehicle and provide

vehicle to one or more employees• Auto must be provided for bona fide non-

compensatory reasons – i.e., on-call • Must have written policy that prohibits

personal use other than commuting or de minims personal use.

• Cannot be used for Control employee • Government Control employee is any

elected official or employee whose salary exceeds $145,700 for 2011.

ANNUAL LEASE VALUATIONANNUAL LEASE VALUATION• Annual Lease Value Table provides annual

lease amount based on the fair market value of the automobile.

• Prorate annual lease amount based on percentage of personal use.

• Additional $.055 mile charged for each personal mile if employer provides fuel.

• Records must be maintained to show total miles and personal or business use.

• Employer may elect to tax 100% personal.

Exempt Vehicles• Clearly Marked Police

or Fire Vehicles• Unmarked Police Cars

*• Ambulances or

Hearses• Large Trucks• School Buses

EMPLOYEE EXPENSE

REIMBURSEMENTPLANS:

Must have an “Accountable

Plan”

MUST MEET ALL THREE RULES TO BE ACCOUNTABLE:

• Have a Business Connection• Be Substantiated by the

Employee• Return of Excess

Reimbursements

REIMBURSEMENTS THAT MAY BE WAGES:

• AUTOMOBILE EXPENSE REIMBURSEMENTS

• MEALS• LODGING• CLOTHING• MATERIALS AND TOOLS• MOVING EXPENSES

NON-ACCOUNTABLE PLANS

EXPENSES ARE NOT SUBSTANTIATED TO YOU WITH DOCUMENTS, SUCH AS RECEIPTS.

ADVANCES ARE NOT ACCOUNTED FOR AND/OR AMOUNTS IN EXCESS ARE NOT RETURNED TO YOU WITHIN A REASONABLE PERIOD OF TIME.

REASONABLE PERIOD OF TIME IS WITHIN 120 DAYS.

EMPLOYEE ALLOWANCES

Types of Allowances

• Car Allowance• Uniform Allowance• Moving Allowance• Travel Advance• Tool Allowance

Cell Phones and Computers• Computers are considered “listed

property”• Must account for personal use• Personal use taxable wages • Wages subject to all employment tax• NOTE: Cell phones are no longer

considered “listed property” – must be noncompensatory reasons

Supper Money• Must be paid to enable employee

to work overtime• Based on hours worked - Taxable

wages• Subject to all employment taxes

Longevity Pay• Report on Form W-2• Do NOT report on Form 1099-Misc• Subject to all employment taxes

Reimbursement Personal Expenses

• Payment for meals, not away overnight - Personal

• Uniforms must be qualified• Plain clothes detectives - reimbursed

for torn suit - Personal

Resources• Publications 15, 15A, 15B• IRC Section 3121• Payroll Management Guides• NC 218 Coordinator• Internal Revenue Service

Idaho FSLG Specialist• Chris Casteel

• Phone: 208-363-8818• Fax: 208-387-2849• E-mail:

•chris.k.casteel@irs.gov• Address:

•550 West Fort •Boise, ID 83724

• .