Payroll Fringe Benefits Reporting and Taxation: What Employers - - PowerPoint PPT Presentation

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Payroll Fringe Benefits Reporting and Taxation: What Employers - - PowerPoint PPT Presentation

Oct 08, 2023 328 likes •866 views

Payroll Fringe Benefits Reporting and Taxation: What Employers Should Know November 16, 2016 The webinar will start at 10:30 a.m. CT Cindy McSwain Sonia Phillips Sr. Vice President Sr. Payroll Manager Outsourcing Services Outsourcing

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Payroll Fringe Benefits Reporting and Taxation: What Employers Should Know

November 16, 2016 The webinar will start at 10:30 a.m. CT

Cindy McSwain

  • Sr. Vice President

Outsourcing Services Sonia Phillips

  • Sr. Payroll Manager

Outsourcing Services

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Administration

If you need HR or CPE credit, please participate in all polls throughout the presentation.

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Administration

A recording of today’s webinar will be emailed for your reference or to share with others.

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Administration

For best quality, call in by phone instead of using your computer speakers.

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Administration

To ask questions during the presentation, use the questions box on the right side of your screen.

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Administration

Please provide your feedback at the end of today’s presentation.

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About the Speaker

Cindy McSwain

Senior Vice President Outsourcing Services

Leads AGH’s outsourcing services 10 yrs. audit experience Member of AICPA, KSCPA, and numerous civic organizations

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About the Speaker

Sonia Phillips

Senior Payroll Manager Outsourcing Services

Handles payroll processing, reporting, and tax filings for multi- state, multi-site companies Expertise in technology, employee benefits and payroll

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Polling Question #1

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Learning Objectives

Identify various types of fringe benefits. Learn the taxability and reporting requirements of various fringe benefits. Understand the substantiation requirements.

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Compensation “…all income from whatever source derived, including (but not limited to) compensation for services, including fees, commissions, fringe benefits, and similar items…” (IRC §61)

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Compensation

“…gross income means all income from whatever source derived, unless excluded by law. Gross income includes income realized in any form, whether in money, property or services. Income may be realized, therefore, in the form of services, meals, accommodations, stock, or other property, as well as cash.” (IRS Regulations §1.61-1)

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Compensation

Gross Income

(IRS Regulations §1.61-1)

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Compensation

Gross Income

All income (Unless excluded by law)

(IRS Regulations §1.61-1)

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Compensation

Gross Income

All income (unless excluded by law)

Money Property Services

(IRS Regulations §1.61-1)

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Compensation

Gross Income

All income (Unless excluded by law)

Money Property Services

Income may be realized in the form of

(IRS Regulations §1.61-1)

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Compensation

Gross Income

All income (Unless excluded by law)

Money Property Services

Income may be realized in the form of

Services Meals Stock Cash Other property

(IRS Regulations §1.61-1)

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Fringe Benefits

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Polling Question #2

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Identify

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Fringe Benefits

No dollar limit on de minimis fringe benefits All cash benefits are taxable. Date of “payment” optional for non-cash benefits as long as reported at least annually Withholding on fringe benefits

Add to regular wages Optional flat tax rate (25% fed)

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COMMON FRINGE BENEFITS

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Working Conditions

  • Includes property or

services

  • Non-taxable if employee

could have deducted on personal return

  • Must be business related
  • Must be substantiated
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De minimis

  • Based on frequency, not

value

  • Can exclude personal use of

business equipment if minimal

  • Group meals, employee

picnics

  • Does NOT include cash
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Employee Discounts

  • Property or service must be
  • ffered to the public as part
  • f business
  • For property, cannot exceed

employer’s gross profit percentage times the public price

  • For services, no more than

20% of public price

  • Cannot be excluded for HCE

if discount not offered to all employees

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Qualified Transportation

  • Commuter transportation
  • Transit passes
  • Qualified parking
  • Bicycle commuting
  • Cannot exceed monthly

excludable limits

  • Must be substantiated
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Travel

  • Must be under accountable

plan (aka, substantiation)

  • Travel must be temporary
  • Employee must be away

from tax home

  • Per diems based on location
  • Per diems can’t extend past
  • ne year
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Transportation

  • Must be documented
  • Local business travel
  • May include air, train, bus

shuttle and taxi fares

  • May be a mileage

reimbursement

  • Can include tolls and

parking fees

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Moving Expenses

  • Move must be directly

related to work

  • New job must be 50 miles

farther from home

  • Non-taxable if employee

could have deducted on personal return (see IRS Pub 521)

  • Requires substantiation and

analysis

  • Consider a fully taxable

allowance

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Meals & Lodging

  • Meals are excludable if

provided on premises and for the employer benefit

  • Meals while traveling fall

under travel expenses

  • Lodging is excludable if

provided on premises, for the employer benefit and a requirement

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Employee Vehicle

  • Employee vehicle

reimbursement

  • Substantiate
  • Excludable if at or less

than IRS stated rates

  • Methods for employer

provided vehicle

  • Lease valuation rule
  • Cents-per-mile rule
  • Commuting rule
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Equipment & Allowances

  • Equipment that is business

expense

  • Reimbursements must be

substantiated

  • Stipends and allowances

are not excludable

  • Uniforms excludable if

required and not street wear

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Awards & Prizes

  • Cash is ALWAYS wages
  • Random drawings,

recognition and performance awards includable

  • Certain non-cash may be

excluded with specific criteria

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Professional Licenses & Dues

  • Licenses
  • Employee must be

required to maintain

  • Directly related to job
  • Dues
  • Professional
  • rganizations excluded
  • Social clubs taxable
  • Substantiation required
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Education Reimbursement

  • Working condition fringe
  • Not allowed for minimum

job requirements

  • Not allowed if training for

new trade or business

  • Must be required by

employer or law

  • Qualified educational

program

  • Written program
  • Limited amount
  • Qualified scholarships and

tuition

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Dependent Care Assistance

  • May provide household and

dependent care to allow employee to work

  • Must not favor HCEs
  • Must believe employee can

exclude from gross income

  • Include in Box 10 of W-2
  • Same limits as cafeteria

plan

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Group Term Life Insurance

  • Policy in excess of $50,000
  • Discriminatory plans include

entire policy value

  • Consider terminated

employees and last paycheck

  • Spouse or dependent policy

greater than $2,000 makes entire policy taxable

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Polling Question #3

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Record

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Paying Employee Taxes

Grossing up earnings Gross earnings = Desired net payments (100% - total tax%)

Note: Be careful when nearing the $200,000 additional Medicare tax wage threshold or the $1,000,000 threshold.

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Supplemental Wage Payments

Anything that isn’t regular wages

Bonus Back pay Commissions

Federal withholding at 25% State withholding – check the rates

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Report

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Wage and Tax Reconciliation

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Wage and Tax Reconciliation

Compare reconciliation to W-2s. Compare W-2s to all 941s.

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Year-End Reporting Issues

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Year-End Reporting Issues

Employer-provided health insurance

Greater than 250 employees Excludes Indian tribal governments

Deferred compensation Third-party sick pay

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Summary

Identify and value Record Report

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Polling Question #4

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Thank you!

Cindy K. McSwain

Senior Vice President, Outsourcing Services Cindy.Mcswain@aghlc.com linkedin.com/in/cindymcswain @AGHCindy

Sonia J. Phillips

Senior Payroll Manager, Outsourcing Services Sonia.Phillips@aghlc.com http://www.linkedin.com/in/soniajphillips 316.267.7231

Check out our other webinars! aghuniversity.com Questions NOT related to today’s content? mike.ditch@aghlc.com