Taxable vs Non-Taxable Fringe Benefits
Please see below for additional instructions and information regarding this program.
Employee expense reimbursements are subject to IRS guidelines and can be disallowed as expenses – and even considered compensation to those employees – if not handled correctly. Further, if employee expense reimbursements do not meet IRS guidelines, they may be disallowed as expenses and considered compensation to those employees, leaving the employer responsible for the associated payroll taxes – plus any penalties.
Taxable and nontaxable fringe benefit are scattered throughout the Internal Revenue Code. Benefits can be hid in Sec 274, 162, 119, 132, 127, and 82. Add in numerous Announcements, Notices and Regulations and we have a complex web. This course will concentrate on the development of an Accountable Reimbursement Plan under Sec 274 and accompanying regulations plus recent pronouncements and inflation increases.
Fringe Benefit Examples and How They Relate to W2 and 1099 preparation:
- Accountable vs. non-Accountable Expense Reimbursement Plans
- Record keeping requirements of Sec. 274 & Accountable Plans
- Deductible and Non-deductible Meals
- De minimis fringe benefits
- No added cost benefits
- Cash payments
- Auto allowances
- Company vehicles
- Prizes, awards, gifts
We'll Answer These and Other Questions:
- What are the taxable and non-taxable wages?
- Are meal allowances nontaxable?
- Are travel allowances nontaxable?
- What other benefits are nontaxable wages?
- What meals are 100% deductible and nontaxable to employees?
Fringe Benefits Overview - What is a Fringe Benefit? 00:01:05
Fringe Benefits Overview - 1099/W2 Reporting 00:07:21
Fringe Benefits Overview - Taxable Wages vs. Contractor 1099 Reimbursements 00:10:20
Fringe Benefits Overview - Taxable Wages vs. Contractor 1099 Reimbursements 00:13:30
What’s New in Fringe Benefits - Tax Cuts and Jobs Act 00:25:03
Accountable Plans 00:46:20
Accountable Plans - Employee Rules 00:46:55
Accountable Plans - Independent Contractor 00:49:09
Accountable Plans - Independent Contractor vs. Entertainment Expenses 00:50:29
The 50% Limit 00:54:33
Limited 80% Rule 00:55:48
Entertainment Expenses vs. Travel 00:56:37
Prizes, Awards, and Gifts 01:00:00
Meals and the Executive Dining Room 01:04:29
Meals and the Executive Dining Room (cont’d) 01:09:10
Fringe Benefit Record-Keeping - Records Must Detail 01:10:33
Fringe Benefit Record-Keeping - Records Must Delineate Expenses 01:14:16
Fringe Benefit Record-Keeping - How Long to Hold Onto Records? 01:16:44
Fringe Benefit Record-Keeping - Independent Contractors 01:17:46
Per Diem Rules 01:18:35
Per Diem Transition Period 01:23:33
Transportation Expenses 01:24:14
Company Car and Executives 01:28:55
Wrap up 01:29:14
Protect Yourself 01:32:07
Attendee Questions 01:33:02
Presentation Closing 01:41:22
- Accountable Plan 00:46:27, 01:19:54
- Federal Insurance Contributions Act (FICA)00:01:32:
- Federal Unemployment Tax Act (FUTA) 00:01:32
- Form 1065 00:04:16
- Form 1099-MISC 00:04:09, 00:46:43
- Form 1099-NEC 00:11:50
- Form 941 00:03:59
- Form W2 00:03:59, 00:46:42
- Fringe Benefit 00:01:32
- General Services Administration (GSA) 01:23:12
- Golden Parachute Payments 00:11:28
- Hours of Service Limits (HOS) 00:56:03
- Nonresident Alien (NRA) 00:50:56
- Per Diem 01:18:40
- Tax Cuts and Jobs Act 00:25:09, 00:54:37
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.
Federal Insurance Contributions Act (FICA): The Federal Insurance Contributions Act is a United States federal payroll contribution directed towards both employees and employers to fund Social Security and Medicare—federal programs that provide benefits for retirees, people with disabilities, and children of deceased workers.
Federal Unemployment Tax Act (FUTA): The Federal Unemployment Tax Act (FUTA) is a federal law that imposes an unemployment tax on employers. The FUTA tax funds the federal government's oversight of each state's unemployment program. Only employers pay FUTA tax. You must deposit the tax quarterly and file an annual form.
Form 1065 : A partnership prepares a K-1 to get a sense of what each partner's share of the returns is, based on the amount of capital he has in the partnership. The financial information posted to each partner's Schedule K-1 is sent to the IRS along with Form 1065.
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 941: Federal form 941, also called a quarterly federal tax return, is an IRS return that employers use to report their FICA taxes paid and owed for the period. The IRS uses this form to calculate the amount of employer tax payments made during the year as well as the amount of taxes due at the end of the year.
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/)
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
Hours of Service Limits (HOS): Hours of Service (HOS) regulations are issued by the Federal Motor Carrier Safety Administration (FMCSA) and govern the working hours of anyone operating a commercial motor vehicle (CMV) in the United States. If you are subject to the Department of Transportation (DOT) hours of service limits, the allowable deductible percentage is increased to 80% for business meals consumed, or related to, any period of duty for which those are in effect.
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.
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)
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.
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 webinars for Convey Compliance Systems, IAPP, Balance Consulting, The Accounts Payable Network, Accounts Payable Now and Tomorrow, Progressive Business Conferences, The Center For Competitive Management,... View Full Profile
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