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Presented on Tuesday, February 28, 2017 Fringe Benefits: Section 132 and Beyond

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Page 1: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Presented on Tuesday, February 28, 2017

Fringe Benefits: Section 132 and Beyond

Page 2: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working
Page 3: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

HOUSEKEEPING

Credit Questions Topic Speaker

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Page 5: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Fringe Benefits Overview

Reporting and taxing fringe benefits

De Minimis fringe benefits

No additional cost services

Working condition fringe benefits

Employee discounts

Employee achievement awards for length of service and safety

Prizes and awards—cash and noncash

Cell phones

Gift certificates and gift cards

Holiday gifts

What Is Our Focus For Today?

©2017 The Payroll Advisor

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Page 6: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Vicki M. Lambert, CPP, is President and Academic Director of The Payroll Advisor™, a firm specializing in payroll education and training. The company’s website www.thepayrolladvisor.comoffers a subscription payroll news service which keeps payroll professionals up-to-date on the latest rules and regulations.

Today’s Presenter

Vicki M. Lambert CPP

Page 7: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Fringe Benefit Overview

©2017 The Payroll Advisor

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Are a form of payment for the performance of services

Does not have to be your employee but could be an independent contractor, partner or director

But normally is an employee

Determine the taxation

Usually FIT, FICA and FUTA and state equivalents but not always

Page 8: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Adding to the Payroll

©2017 The Payroll Advisor

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Most fringe benefits are added to the payroll for taxation and reported as imputed income

Income recognized but not received through the payroll department

Add to the gross calculate and withhold taxes deduct before calculating net of check

Imputed income causes employee to have a smaller check and higher taxes—make sure they understand that

Page 9: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Taxing Fringe Benefits

©2017 The Payroll Advisor

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First thing to remember!

CASH or ITS EQUIVALENT IS ALWAYS TAXABLE!

Page 10: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Reporting Fringe Benefits-Form W-2

Form W-2: Boxes 1, 3, and 5 unless specifically exempted from that tax

May need to be in Box 12 under appropriate code

Other boxes as they apply

©2017 The Payroll Advisor

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Don’t forget the state taxes!

Page 11: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Reporting Fringe Benefits-Form 941

Lines 2 and 5a, 5c & 5d unless specifically exempted

©2017 The Payroll Advisor

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Page 12: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

De Minimis

©2017 The Payroll Advisor

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Falls under Section 132 of IRC

Any property or service provided to an employee that has so little value that accounting for it would be unreasonable or administratively impractical

Have to take into account how often and to how many employees it is given

No de minimis on CASH or its equivalent!

Page 13: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

De Minimis Examples

©2017 The Payroll Advisor

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Personal use of photocopier if no more than 15% of total use

Group meals, employee picnics

Occasional tickets to sports events or shows not given as an award—everybody goes

Occasional Meals for working overtime

Occasional Coffee, donuts or soft drinks

Page 14: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

De Minimis Examples

©2017 The Payroll Advisor

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Flowers or fruit for special circumstances

Local telephone calls

Traditional birthday or holiday gifts (NO CASH) with a low FMV

Commuting use of employer’s car if no more than once per month

Employer provided local transportation

Page 15: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

De Minimis Examples

©2017 The Payroll Advisor

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Example 1: an employer provides daily snacks valued at one dollar to an employee. Although the amount is small, the benefit is provided on a regular basis and is, therefore, taxable as wages

Example 2: An employer provides a meal daily to one employee, but not to any other employee. The benefit is “frequent” with respect to that one employee and is therefore not de minimis even though it is infrequent with respect to the rest of the workforce

Page 16: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Never De Minimis

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©2017 The Payroll Advisor

Cash except meal money

in certain cases

(we will discuss later)

Cash Equivalent: Gift cards

savings bonds, gift certificates

Use of Employers:

Apartment, condo,

vacation home or boat

Memberships in country

clubs or athletic facilities

Page 17: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Definitions under De Minimis

©2017 The Payroll Advisor

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The IRS does not furnish a concrete definition of the term “occasional”

The law does not specify a value threshold for benefits to qualify as de minimis

One time, in 2001, the IRS gave advice that a benefit valued at $100 did not qualify as de minimis but this advice was for that specific situation and cannot be relied upon for other situations

Page 18: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Occasional Meal Reimbursements

©2017 The Payroll Advisor

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Regularly provided meal money does not qualify as de minimis

Occasional meal money may qualify if the following 3 conditions are met:

1. Occasional basis: meal is reasonable in value and not provided regularly or frequently

Page 19: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Occasional Meal Reimbursements

©2017 The Payroll Advisor

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2. Provided for overtime work: overtime work necessitates an extension of the employee’s normal work schedule

3. Enables overtime work: provided to enable the employee to work overtimeMeals provided on employer’s premises that are consumed

during the meal period or

Meal money expended for meals consumed during that period satisfy this condition

Page 20: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Not Occasional Meal Reimbursements

©2017 The Payroll Advisor

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Not excludable if provided as part of a company policy or union contract

Required and not occasional

Must set up procedures therefore must account for the benefits which does not meet the “administratively impractical” standard

Meal money calculated on the basis of a number of hours worked is never excludable as de minimis

Page 21: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Example for Meal Money

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Nontaxable: A commuter ferry breaks down and the engineers are required to work overtime to make repairs. After working 8 hours, the engineers break for dinner because they will be working for an additional 3 hours. The supervisor gives each employee $10 for a meal

Page 22: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Example for Meal Money

©2017 The Payroll Advisor

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Taxable: An employer has a policy of reimbursing employees for breakfast or dinner when they are required to work an extra hour before or after their normal work schedule. The reimbursements are taxable because the employer has a policy which indicates the benefit is provided routinely. In addition the meal reimbursement does not enable the employee to work overtime, but is an incentive to do so.

Page 23: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Transportation Fringe Benefits

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Local commuting transportation fare provided to an employee by an employer on an occasional basis and to enable to the employee to work overtime may be excluded as a de minimis fringe benefit

Page 24: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Unusual Circumstances and Unsafe Conditions

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Local transportation for commuting provided to an employee by an employer because of unusual circumstances and unsafe conditions is taxable to the employee as wages at the rate of $1.50 each way

Any additional value is excludable

Unusual circumstances include such times as when an employee is temporarily working outside his normal hours or has a shift change

Page 25: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Unusual Circumstances and Unsafe Conditions

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Unsafe conditions determined by a history of crime in the geographic area surround the employee’s workplace or residence and the time of day during which the employee must commute

Must be a qualified employee to use this special rule

Must have certain conditions met to use this rule

Page 26: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Qualified Employee for Unsafe Conditions

©2017 The Payroll Advisor

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Performs services during the year

Paid on an hourly basis

Not an exempt employee under the FLSA

Is paid overtime or subject to overtime

Not paid more than $120,000 for 2016

Cannot be a “control employee”

Page 27: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Required Conditions

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Employee normally walks or uses public transportation for commuting

Written policy that states employer does not provide transportation for personal purposes other than for commuting because of unsafe conditions

Employees does not use the transportation for personal purposes other than commuting because of unsafe conditions

Page 28: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Example

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Mary is a qualified employee who works as a data-entry clerk from 11pm to 7am. Public transportation is the only means of transport available to her but is considered unsafe by a reasonable person at the beginning of her shift. Employer hires car service to pick her up each evening and return her home each morning. The commute to work is $1.50 because of the unsafe conditions. However the commute home is the FMV of the car as unsafe conditions do not exist for that trip

Page 29: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Qualified Transportation Fringe Benefit

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Applies to:

1. A ride in a commuter highway vehicle between the employee’s home and work place

2. A transit pass

3. Qualified parking

4. Qualified bicycle commuting reimbursement

Exclusion applies whether you provide only one or a combination of these benefits—except bicycles

©2017 The Payroll Advisor

Page 30: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Providing Benefits

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Can be provided directly by employer or through reimbursement arrangementVoucher or similar item not

available? Can do cash in that type of instance

If value is over limit then include amount over limit in wages

Page 31: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Transit Passes

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Any pass, token, farecard, voucher or similar item entitling a person to ride on mass transit and includes bus, rail or ferry

May be publically or privately provided

2017 - $255 per month may be excluded from wages

States may be different

Page 32: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Transit Passes

©2017 The Payroll Advisor

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If sold at discount the discounted price rather than the face amount can be used to determine the exclusion so long as discounted price is available to the public

Example: 10 tickets cost $17.50 if purchased separately but are sold in a packet of 10 for $15. This is offered to the general public so $15 counts against the annual or monthly minimum exclusion

Page 33: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Transit Passes

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No substantiation requirements if the employer distributes the transit passes themselves

Cash reimbursements are only nontaxable if no voucher or similar item is readily available for direct distribution to employees

Example 1: Fred buys a transit pass for $100 each month. At the end of the month he presents it to his employer and is reimbursed the $100—bona fide reimbursement arrangement and is excluded from income

Page 34: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Transit Passes

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Example 2: Larry purchases a monthly transit pass for $100 but presents it to the employer at the beginning of the month. He certifies he purchased it and will use it during the month. The employer reimburses Larry at the time he presents the transit pass. Bona fide reimbursement arrangement is established and the reimbursement is excluded from income

Page 35: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Qualified Parking

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Parking provided to employees on or near employer’s business premises

Includes parking on or near location where employees commute using mass transit or car pools

2017 - $255 per month

Page 36: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Commuter Highway Vehicle

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Seats at least 6 adults not including driver

80% of mileage for commuting

Employees in at least half the seats

Page 37: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Bicycle Commuting

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Exclusion includes any employer reimbursement during the 15-month beginning the first day of the calendar year for reasonable expenses incurred by the employee during the calendar year

Bicycle must be used as regular transportation between employee home and work

Page 38: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Reasonable Costs Include:

©2017 The Payroll Advisor

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Purchase of bicycle and

Bicycle improvements, repair and storage

Commuting month includes:Regularly uses bicycle for a substantial

portion of the travel between home and work

Does not receive transportation in commuter highway vehicle, transit passes or parking benefits

Page 39: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Bicycle Commuting

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For a calendar year, $20 multiplied by the number of qualified bicycle commuting months during that year for qualified bicycle commuting reimbursement of expenses incurred during the year.

Page 40: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

No Additional Cost Services

©2017 The Payroll Advisor

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Employers generally can exclude the value of a no-additional-cost service under Section 132

Employer must not incur an substantial additional costs

Ordinary line of business for which employee performs services

Usually excess capacity services such as airline seats or hotel rooms

Can apply to cable and phone services as well

Page 41: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

No Additional Cost Services

©2017 The Payroll Advisor

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Reciprocal agreements between employers are permitted

The service is the same type of service generally provided to customers in both the line of business in which the employee works and the line of business in which the service is provided.

The employer of the employee and the employer providing the service have a written reciprocal agreement under which a group of employees of each employer, all of whom perform substantial services in the same line of business, may receive no-additional-cost services from the other employer.

Neither the employer of the employee nor the other employer incurs any substantial additional cost either in providing the service or because of the written agreement.

Page 42: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

No Additional Cost Services

©2017 The Payroll Advisor

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Example: Employee J works for Fly By Night Airlines. Whenever there is an open seat on a flight, the airline allows employees to fill the seat. For Employee J to take advantage of this benefit, she must be willing to fly standby to make sure that a paying customer does not want the seat. If the flight is ready to take off and the seat is empty she is allowed to fly on that flight. Following these procedures the cost of the flight is not considered taxable income to Employee J. (Note: Sales tax and landing taxes are considered in a separate category and are decided by individual airline and company).

Page 43: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Working Condition Fringe Benefit

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Property or services provided to employee so employee can perform his or her job

Cost excluded from wages under Section 132

Exclusion applies to extent employee could deduct expense if he or she pays for it themselves

Example: Job related education course

Must be substantiated

Page 44: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Employee Discounts

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Applies to price reductions employer gives to employee

On property or services offered to customers in the ordinary course of the line of business in which employee performs substantial services

Section 132

Cannot use for real property or investment property such as stocks

Page 45: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Employee Discounts

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The following limits apply:

Discount on services 20% of price charged to non-employee customers

For merchandise:• Employer’s gross profit percentage times the price charged

to non-employee customers

Example: Employee G works at Main Street Store and is allowed a 10% discount when buying merchandise from the store

Page 46: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Employee Achievement Awards

Length of Service and Safety only

Tangible personal property

Not disguised compensation

Meaningful presentation

No more than specific dollar amounts$1600 qualified plan

$400 nonqualified plan

©2017 The Payroll Advisor

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Page 47: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Length of Service Award

Will qualify only if either of the following apply:

The employee receives the award after his or her first 5 years of employment

The employee did not receive another length-of-service award (other than de minimis) during the same year or in any of the prior 4 years

©2017 The Payroll Advisor

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Page 48: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Safety Awards

Qualifies unless one of the following applies:

Given to a manager, administrator, clerical employee or other professional employee

During the tax year, more than 10% of your employees have already received a safety achievement award (not counting de minimis)

©2017 The Payroll Advisor

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Page 49: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Bonuses, Prizes and Awards

Cash is taxable!

So are all other types of payments

Trips, tangible personal property or whatever!

Doesn’t matter what it is-if given as a prize, bonus or award it is taxable income

Doesn’t matter what you call the “award”

©2017 The Payroll Advisor

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Page 50: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Company Supplied Cell Phones

©2017 The Payroll Advisor

The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit.

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Page 51: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Noncompensatory Business Purposes

©2017 The Payroll Advisor

You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. Examples of substantial business reasons include the employer's:

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Page 52: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Noncompensatory Business Purposes

©2017 The Payroll Advisor

Need to contact the employee at all times for work-related emergencies,

Requirement that the employee be available to speak with clients at times when the employee is away from the office, and

Need to speak with clients located in other time zones at times outside the employee's normal workday.

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Page 53: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Noncompensatory Business Purposes

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You cannot exclude from an employee's wages the value of a cell phone provided to promote good will of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee.

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Page 54: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Reimbursement for Personal Cell Phones Used for Business

©2017 The Payroll Advisor

If the employer requires the employee to maintain and use their personal cell phones for business purposes and reimburses the employee for the business use of their personal cell phones the following rules apply:

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Page 55: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Reimbursement for Personal Cell Phones

©2017 The Payroll Advisor

Must have substantial business reasons for requiring employee’s use of personal cell phones in connection with employer’s trade or business

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Page 56: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Substantial Business Reasons

©2017 The Payroll Advisor

Need to contact the employee at all times for work-related emergencies,

Requirement that the employee be available to speak with clients at times when the employee is away from the office, and

Need to speak with clients located in other time zones at times outside the employee's normal workday.

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Page 57: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Reimbursement for Personal Cell Phones

©2017 The Payroll Advisor

Employee must maintain cell phone coverage that is reasonably related to the needs of the employer’s business

Reimbursement must be reasonably calculated so as to not exceed actual expenses the employee incurs

Must not be a substitute for a portion of the employee’s wages

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Page 58: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Acceptable Reimbursement Arrangement

©2017 The Payroll Advisor

Employee must communicate with employer’s clients outside of normal business hours

Employee’s basic coverage plan charges a flat-rate per month for a certain number of minutes for domestic calls

Employer reimburses employee for the monthly basic plan expense to enable employee to maintain contact with business clients after hours

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Page 59: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Unacceptable Reimbursement Arrangements

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Reimbursement for international or satellite cell phone coverage for technician whose clients are in local geographical area

Pattern of reimbursement that deviates significantly from a normal cell phone use in the employer’s businessExample: employee is reimbursed $100 per quarter in

quarters 1-3 of the year but receives a reimbursement of $500 in quarter 4

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Page 60: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Holiday Gifts/Gift Certificates, Cards

Can be De Minimis

Cash or cash equivalent is taxableThis includes gift certificates to

supermarkets!

Turkey rule appliesTurkey, ham or similar item of nominal

value at holiday time.

Must be for the actual turkey not to store

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Page 61: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Enter all questions into the “Questions” section of the GoToWebinar panel on your computer screen

Are There Any Questions?

Page 62: Fringe Benefits: Section 132 and Beyond - Ascentis · Fringe Benefits Overview Reporting and taxing fringe benefits De Minimis fringe benefits No additional cost services Working

Ascentis Payroll can help you manage fringe benefits but still give you plenty of setup choices

• Set your pay codes up as cash payments, imputed income, or non-tax reimbursements

• Customized settings for federal and state tax configurations and Box 12 code mapping

• Include or exclude fringe benefits on regular checks, one-off checks, or in adjustment runs

Stay in compliance and have full control at the same time!

How Can Ascentis Help Me?

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Stay on the webinar, online for the full 60

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Certificates delivered by

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