Taxable vs Non-Taxable Fringe Benefits

1. Introduction
2. What’s New 00:01:01
3. 1099-NEC and 1099-MISC 00:08:00
4. New Draft Form 1099-NEC 00:08:24
5. New Draft Form 1099-MISC 00:24:22
6. Overview -  The Difference Between an Expense Reimbursement and Fringe Benefit 00:31:39
7. Overview  - 1099/W2 Reporting 00:42:19
8. Overview  - Taxable Wages Vs. 1099 Reimbursements 00:51:55
9. Overview  - Non-Taxable Fringe Benefits 00:52:24
10. Overview  - Working Condition Fringes 01:00:58
11. Overview  - De Minimis Fringes 01:01:04
12. Fringes and Reimbursements Issues 01:08:45
13. Accountable Plans - Employee Rules 01:16:15
14. Accountable Plans - Contractor Rules 01:20:15
15. Watch Out For Sneaky Reimbursement Traps! 01:22:03
16. Fringe Benefit/Record-Keeping - Records Must Detail 01:22:17
17. Fringe Benefit/Record-Keeping - Records Must Delineate Expenses 01:23:39
18. Fringe Benefit/Record-Keeping - How Long To Hold Onto Records? 01:24:46
19. Fringe Benefit/Record-Keeping - Independent Contractors 01:26:06
20. Transportation Reimbursed Expenses 01:27:51
21. Transportation Reimbursed Expenses - The Company Car And Executives 01:32:20
22. Wrap Up 01:34:30
23. Protect Yourself 01:39:31
24. Attendee Questions 01:40:27
25. Presentation Closing 01:41:58

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  Steven Mercatante

  Steven Mercatante is the principal and founder of TIR Consulting, LLC. He is a nationally recognized leader in tax reporting education and consulting on specialized compliance issues. He has conducted on-site consultation for corporate clients from across the world and led countless seminars and web [...]

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• Accountable Plan 00:52:09, 01:16:13, 01:20:01, 01:36:09
• Audit 00:18:28, 01:23:18, 01:35:45, 01:39:4
• Backup Withholding 00:19:52
• B-Notice 00:03:27, 00:23:56
• ChatGPT 00:05:51
• DBA -Doing Business As 00:27:48
• De Minimis Fringe Benefits 01:01:07
• Department of Labor (DOL) 00:21:57
• Disregarded Entity 00:27:58
• Due Diligence 00:03:08, 00:10:30
• EIN 00:28:22
• Exempt 00:22:3, 01:09:25
• Expense 00:32:14, 00:45:47, 01:10:38, 01:24:18, 01:27:55, 01:32:33
• Expense Reimbursement 00:01:27, 00:05:23, 00:31:49, 00:44:48, 01:09:08
• Fair Labor Standards Act (FLSA) 00:20:55, 00:21:44, 00:42:22, 01:35:32
• Fair Market Value (FMV) 00:46:57
• Federal Insurance Contributions Act (FICA) 00:49:31, 00:55:12
• Federal Unemployment Tax Act (FUTA) 00:58:28
• Form 1042 01:23:08
• Form 1042-S 01:23:09
• Form 1099- MISC 00:02:19, 00:24:24
• Form 1099-NEC 00:02:15, 00:08:24, 00:22:54, 01:07:39
• Form W-2 00:10:14, 00:23:48, 00:29:37, 00:41:56, 00:49:34, 00:52:36, 01:08:32, 01:34:33
• Form W-8 01:23:08
• Form W-9 00:09:33, 00:26:58, 00:29:39
• Fringe Benefits 00:01:01, 00:05:26, 00:31:50, 00:40:25, 00:47:40, 00:50:36, 01:09:21, 01:31:41
• General Services Administration (GSA) 01:38:49
• Golden Parachute Payment 00:25:57
• Health Savings Account (HSA) 00:49:09
• Independent Contractor 00:20:38, 00:21:55, 00:26:31, 00:32:49, 00:51:59, 01:20:23, 01:26:11
• IRC Section 132 00:42:44, 00:53:26, 01:33:32
• Liability 00:24:21
• Limited Liability Company (LLC) 00:27:47
• Minimum Wage 00:22:40
• Non-Profit Organizations (NPO)  00:41:07
• Nonresident Alien (NRA) 01:22:37
• Overtime 00:19:3, 00:22:40, 00:26:12, 00:30:02, 01:35:21
• Per Diem 01:38:58
• Reasonable Cause 00:04:05, 00:06:32, 00:27:36, 01:39:46
• Resident Alien 01:22:26
• S Corporation 00:47:35
• Section 127 Plans 01:09:45, 01:33:35
• Shareholder 00:47:47
• Sole Proprietor 00:27:52
• Tax Cuts and Jobs Act 01:08:59
• Tax Gap 00:02:36
• Tax Home 00:35:03
• TIN 00:03:30
• Travel Expense 00:33:49, 00:37:23, 01:39:23
• Vendor 00:10:00, 00:19:52
• Wage 00:41:22, 00:47:45, 01:01:40, 01:09:52, 01:31:17, 01:38:36
• Working Condition Fringe Benefit 00:42:45, 00:53:49

Accountable Plan: An accountable plan is a plan that follows the Internal Revenue Service (IRS) regulations for reimbursing workers for business expenses in which reimbursement is not counted as income. ... However, these expenses must be business-related to fall under an accountable plan.

Audit: A formal examination of an organization's or individual's accounts or financial situation

B-Notice: A notice from the IRS stating that one or more tax ID numbers were missing from a 1099 or do not match the IRS records.

Backup Withholding: Backup withholding is the tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. (www.investopedia.com)

ChatGPT: ChatGPT, which stands for Chat Generative Pre-trained Transformer, is a large language model-based chatbot developed by OpenAI and launched on November 30, 2022, notable for enabling users to refine and steer a conversation towards a desired length, format, style, level of detail, and language used.

DBA -Doing Business As: Sometimes it makes sense for a company to do business under a different name. To do this, the company has to file what's known as a DBA, meaning "doing business as." A DBA is also known as a "fictitious business name," "trade name," or "assumed name."

De Minimis Fringe Benefits: De minimis fringe benefits are low-value perks provided by an employer; de minimis is legal Latin for "minimal". Perks that are determined to be de minimis fringe benefits may not be accounted or taxed in some jurisdictions as having too small value and too complicated an accounting.

Department of Labor (DOL): The United States Department of Labor is a cabinet-level department of the U.S. federal government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, reemployment services, and some economic statistics; many U.S. states also have such departments.

Disregarded Entity: A disregarded entity refers to a business entity with one owner that is not recognized for tax purposes as an entity separate from its owner. A single-member LLC ( “SMLLC”), for example, is considered to be a disregarded entity. (www.pntax.com)

Due Diligence: Due diligence is a process or effort to collect and analyze information before making a decision or conducting a transaction so a party is not held legally liable for any loss or damage. The term applies to many situations but most notably to business transactions.

EIN: The Employer Identification Number, also known as the Federal Employer Identification Number or the Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service to business entities operating in the United States for the purposes of identification.

Exempt : Exempt employee is a term that refers to a category of employees set out in the Fair Labor Standards Act. They do not receive overtime pay, nor do they qualify for the minimum wage

Expense: Offset (an item of expenditure) as an expense against taxable income.

Expense Reimbursement: Expense reimbursement is a method for paying employees back when they spend their own money on business-related expenses. These expenses generally occur when an employee is traveling for business but can occur in other work-related situations. (www.thebalancecareers.com)

Fair Labor Standards Act (FLSA): The Fair Labor Standards Act of 1938 29 U.S.C. § 203 is a United States labor law that creates the right to a minimum wage, and "time-and-a-half" overtime pay when people work over forty hours a week. It also prohibits most employment of minors in "oppressive child labor".

Fair Market Value (FMV): The term fair market value is used throughout the Internal Revenue Code among other federal statutory laws in the USA including Bankruptcy, many state laws, and several regulatory bodies. In litigation in many jurisdictions in the United States, the fair market value is determined at a hearing.

Form 1042: Form 1042, also "Annual Withholding Tax Return for U.S. Source Income of Foreign Persons", is used to report tax withheld on certain income of foreign persons.

Form 1042-S: Form 1042-S is used to report amounts paid to foreign persons (including persons presumed to be foreign) who are subject to income tax withholding. For an individual taxpayer, Form 1042-S is a document provided to you (and the IRS) by the payer of the income reported.

Form 1099-DIV : Form 1099-DIV: Dividends and Distributions is an Internal Revenue Service (IRS) form sent to investors who receive distributions from any type of investment during a calendar year. Investors can receive multiple 1099-DIVs. Each Form 1099-DIV should be reported on an investor's tax filing.

Form 1099-MISC: The Form 1099-MISC is an Internal Revenue Service (IRS) tax return document used to report miscellaneous payments made to nonemployee individuals, such as independent contractors, during the calendar year. (www.shrm.org)

Form 1099-NEC: In the context of 1099 tax filing, NEC stands for “Nonemployee Compensation” (the first letters of the three words None, Employee and Compensation). Most tax payers recognize NEC as box 7 on Form 1099-MISC. NEC is used to report income paid to independent-contractors / the-self-employed (referred to as 1099 employees for simplification purposes). So, while employers report income that gets paid to employees on Box 1 (Wages, tips, other compensation) of the W2 form, payers report income that gets paid to none-employees on Box 7 (NEC) of the 1099-MISC form. As an individual, if you received form 1099-MISC instead of Form W-2 then the payer did not consider you an employee and did not withhold income tax or social security and Medicare tax.

Form W-2: Form W-2 is an Internal Revenue Service tax form used in the United States to report wages paid to employees and the taxes withheld from them. Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. - Wikipedia (https://en.wikipedia.org/)

Form W-8: Form W-8 is filled out by foreign entities (citizens and corporations) in order to claim exempt status from certain tax withholdings. The form is used to declare an entity's status as non-resident alien or foreign national who works outside of the United States.

Form W-9: Form W-9 (officially, the "Request for Taxpayer Identification Number and Certification") is used in the United States income tax system by a third party who must file an information return with the Internal Revenue Service (IRS). It requests the name, address, and taxpayer identification information of a taxpayer (in the form of a Social Security Number or Employer Identification Number). - Wikipedia (https://en.m.wikipedia.org/)

Fringe Benefits: An extra benefit supplementing an employee's salary, for example, a company car, subsidized meals, health insurance, etc.

General Services Administration (GSA): The General Services Administration is an independent agency of the United States government established in 1949 to help manage and support the basic functioning of federal agencies.

Golden Parachute Payments: Golden parachute payments are payments of compensation made to individuals whose companies experience a change in control

Health Savings Account (HSA): A savings account used in conjunction with a high-deductible health insurance policy that allows users to save money tax-free against medical expenses.

IRC Section 132: Internal Revenue Code Section 132(a) provides eight types of fringe benefits that are excluded from gross income

IRC Section 274: Section 274(k) generally provides that no deduction is allowed for the expense of any food or beverages unless (A) such expense is not lavish or extravagant under the circumstances, and (B) the taxpayer (or an employee of the taxpayer) is present at the furnishing of such food or beverages.

Independent Contractor: An independent contractor is a person or entity contracted to perform work or provide services to another entity as a non-employee. As a result, independent contractors must pay their own Social Security and Medicare taxes. - Investopedia (https://www.investopedia.com/)

Liability: In financial accounting, a liability is defined as the future sacrifices of economic benefits that the entity is obliged to make to other entities as a result of past transactions or other past events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future.

Limited Liability Company (LLC): An LLC is a corporate structure where members cannot be held accountable for the company’s debts or liabilities. This can shield business owners from losing their entire life savings if, for example, someone were to sue the company. Can be a single member (much like a sole proprietor) or a multi-member. It shares certain traits of both corporations as well as partnerships or sole proprietorships. It is not a corporation.

Minimum Wage: The lowest wage paid or permitted to be paid specifically fixed by a legal authority or by contract as the least that may be paid either to employed persons generally or to a particular category of employed persons.

Non-Profit Organizations (NPO): A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in contrary with an entity that operates as a business aiming to generate a profit for its owners.

Nonresident Alien (NRA): This income is taxed at a flat 30% rate, unless a tax treaty specifies a lower rate. Nonresident aliens must file and pay any tax due using Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents.

Overtime: Overtime is time and a half of what an employee earns for every hour worked over 40 in a workweek. The FLSA salary threshold is the minimum salary employers must pay employees for them to be exempt from overtime wages.

Per Diem: (Latin for "per day" or "for each day") or daily allowance is a specific amount of money an organization gives an individual, often an employee, per day to cover living expenses when traveling for work. - Wikipedia (https://en.wikipedia.org)

Reasonable Cause : Reasonable cause is based on all the facts and circumstances in your situation. The IRS will consider any reason which establishes that you used all ordinary business care and prudence to meet your federal tax obligations but were nevertheless unable to do so.

Resident Alien : A resident alien is a foreign person who is a permanent resident of the country in which he or she resides but does not have citizenship. To fall under this classification in the United States, a person needs to either have a current green card or have had one in the previous calendar year.

S Corporation: An S corporation, for United States federal income tax, is a closely held corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. In general, S corporations do not pay any income taxes.

Section 127 Plans: A Section 127 plan (“127 plan” or “127c plan” for short) is the official written legal document that outlines the terms of and governs a company's Educational Assistance program (EAP).

Shareholder: A shareholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders may be referred to as members of a corporation.

Sole Proprietor: A business that legally has no separate existence from its owner. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.

TIN: A Taxpayer Identification Number is an identifying number used for tax purposes in the United States and in other countries under the Common Reporting Standard. In the United States, it is also known as a Tax Identification Number or Federal Taxpayer Identification Number.

Tax Cuts and Jobs Act: The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, Pub.L. 115–97, is a congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act, that amended the Internal Revenue Code of 1986.

Tax Gap: The gross tax gap is the difference between true tax liability for a given tax year and the amount that is paid on time. It is comprised of the nonfiling gap, the underreporting gap, and the underpayment (or remittance) gap.

Tax Home: A tax home is the general locality of an individual's primary place of work. It is the city or general vicinity where his or her primary place of business or employment is located, regardless of the location of the individual's residence.

Travel Expense: Travel expenses are costs associated with traveling for the purpose of conducting business-related activities. Travel expenses can generally be deducted by employees as non-reimbursed costs incurred while traveling away from home specifically for business purposes.

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.

Wage: A fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an employee, especially to a manual or unskilled worker.

Working Condition Fringe Benefit: The working condition benefit is a type of fringe benefit employers offer employees. Working condition benefits include property and services employers provide to employees so they can perform their jobs.