federal state and local governments · 1 federal state and local governments fringe benefits tax...
Post on 15-Mar-2020
7 Views
Preview:
TRANSCRIPT
1
FEDERAL STATE AND LOCAL GOVERNMENTS
FRINGE BENEFITS
TAX EXEMPT/ GOVERNMENT ENTITIES:
Federal, State and Local Governments Indian Tribal Governments Tax Exempt Bonds
FSLG Mission: To provide government entities with top
quality service by helping them understand and comply
with applicable tax laws, and to protect the public interest by applying the
tax laws with integrity and fairness to all
2
TOPICS:
FRINGE BENEFITS (Employee Reimbursements)
ACCOUNTABLE PLANS
EMPLOYEE VS. INDEPENDENT
CONTRACTOR
WHAT IS A
FRINGE BENEFIT?
FRINGE BENEFITS:
ANY PROPERTY, SERVICE OR CASH (Other than Salary, Provided by Employer)
TAXABLE UNLESS EXCLUDED SPECIFICALLY BY LAW Example: Medical Premiums IRC 106
3
WHAT TO DO?
Identify specific benefit provided to employee(s);
Determine if benefit is excluded by law; and
Determine if benefit is fully taxable, or only partially.
Non-Taxable Fringe Benefits: No additional cost service Qualified employee discounts Working condition fringe De minimis fringe Qualified transportation expenses Qualified Moving Expense
Reimbursements
TAXABLE FRINGE BENEFITS:
INCLUDE in Employee’s wages and on W-2 (Never on 1099-MISC)
Subject to Federal Withholding, Social Security and Medicare
Even if benefit is received by/for spouse or child of employee
4
ACCOUNTABLE PLAN
Business Connection Adequate ‘accounting’ by employee
in reasonable time period Excess reimbursement returned in a
reasonable time period
NON-ACCOUNTABLE PLAN:
DOES NOT MEET ALL 3 REQUIREMENTS FOR AN ACCOUNTABLE PLAN
BENEFIT IS FULLY TAXABLE WHEN PAID
NON-TRAVEL FRINGE BENEFITS:
Clothing Equipment Professional
Licenses Awards Bonuses
5
AWARDS ARE TAXABLE
CASH PRIZES OR AWARDS are always taxable
PERFORMANCE AWARDS are always taxable
NON-CASH: Use Fair Market Value
AWARDS EXCEPTIONS:
Certain Awards transferred to Charities Pulitzer, Nobel Peace Prize
Certain Employee Achievement Awards Length of Service, Safety - Not Cash
Nominal Holiday/Special Occasion Awards Coffee mugs, plagues, etc.
REMEMBER:
6
TRAVEL-RELATED FRINGE BENEFITS:
Per Diem Allowances for lodging, meals and/or incidentals for business related travel while away from home
MEAL ALLOWANCES WHILE TRAVELING ON BUSINESS:
MEALS AWAY FROM HOME: OVERNIGHT
Accountable Plan - Not taxable NOT OVERNIGHT
Taxable as wages
Meals with business meetings - NOT taxable if:
clear business setting * directly related *
Employer buys you lunch - Taxable as wages *
7
AUTOMOBILE EXPENSES: EMPLOYEE CAR USED FOR
EMPLOYER’S BUSINESS: 2010 Federal Mileage Rate - $.50
At this rate or less: Non-taxable to Employee
Excess over this rate: Taxable to Employee - only the excess amount
If Employee chooses not to get reimbursed, cannot claim on personal tax return.
Substantiation required
SUBSTANTIATION:
Employee reports to Employer: Date, Purpose, Place of each trip Mileage ‘at or near the time’ incurred Examples: Diary, log, trip sheet,
expense statement or similar record Commuting is always taxable - it is
non-business travel
EMPLOYER-PROVIDED VEHICLE:
HOW DOES EMPLOYEE ACCOUNT FOR PERSONAL USE?
Personal Use is taxable Verified Business Use is not taxable Employee can reimburse Employer for
personal use
8
Personal Use:
IF NO RECORD KEPT: Value of ALL use is taxable
IF RECORD KEPT: Only Personal Use is taxable
VALUING PERSONAL USE - THREE RULES:
Automobile Lease Valuation Rule* Cents-Per-Mile Rule Commuting Rule
GENERAL RULE: Lease Valuation Rule
Compute Personal Use Determine what employee would pay
to lease auto (FMV) Multiply FMV by % of personal use
9
SPECIAL ACCOUNTING RULES (Automobiles):
Employer can elect to defer withholding Employer can withhold at 28% November and December benefits may
be treated as paid in next year Employer can elect not to withhold FIT
Employer must tell employee Employer includes in wages/ W-2
EMPLOYEE OR INDEPENDENT CONTRACTOR?
Determine Worker Status Fringe benefit rules apply Accountable Plan rules apply Report payments on information
return: W-2 for Employee 1099-MISC for Independent
Contractor
The IRS looks at THREE FACTORS TO
DETERMINE WORKER STATUS:
BEHAVIORAL CONTROL FINANCIAL CONTROL RELATIONSHIP OF PARTIES
10
BEHAVIORAL RELATIONSHP:
IF the firm provides instructions: on how to do the job, what hours to work, what days, etc. , the worker is most likely an employee.
FINANCIAL CONTROL:
If the firm provides an office, all office supplies, computer and other business equipment to the
worker, the worker is an employee.
RELATIONSHIP OF THE PARTIES:
If the firm provides benefits: health insurance, life insurance, retirement benefits, 40l(k) plan, 403(b) the worker is an employee.
11
INDEPENDENT CONTRACTOR
Offers services to public Operates own business Bills for services Doesn’t have to personally perform
work
COMMON MISCONCEPTIONS:
EMPLOYEES CAN BE: Part-time workers Temporary workers Probationary period Workers who say they are
Independent Contractors
REPORTING FOR EMPLOYEES: All Compensation: W-2 Awards Backpay Bonuses Severance Pay Taxable Fringe Benefits
12
REPORTING FOR INDEPENDENT
CONTRACTORS:
ALL COMPENSATION FOR SERVICES: On 1099-MISC If Non-Accountable Plan:
Include Reimbursed Expenses on 1099
NEED MORE INFORMATION?
CALL US:
512-464-3129 Steve C. O’Brien
Federal State and Local Government Specialist
IRS CONTACTS:
IRS INFORMATION 1-800-829-1040
IRS PUBLICATIONS 1-800-829-3676
INTERNET: www.irs.gov
13
ADDITIONAL NUMBERS: EXEMPT ORG. /EMPLOYEE
PLANS HOTLINE: 877-829-5500
FOREIGN (ALIEN) QUESTIONS: 202-874-1460
INFORMATION RETURNS QUESTIONS: 304-263-8700
THANK YOU!
top related