Publication 15-B - Employer'S Tax Guide To Fringe Benefits - 2012 Page 11
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33•
You give reasonable notice of the program to eligible
Employee. For this exclusion, treat the following individu-
employees.
als as employees.
•
Your program can cover former employees if their employ-
A current employee.
ment is the reason for the coverage.
•
A former employee who retired or left on disability.
For this exclusion, a highly compensated employee for
•
A widow or widower of an individual who died while
2012 is an employee who meets either of the following
an employee.
tests.
•
A widow or widower of an employee who retired or
1. The employee was a 5% owner at any time during
left on disability.
the year or the preceding year.
•
A leased employee who has provided services to
2. The employee received more than $115,000 in pay
you on a substantially full-time basis for at least a
for the preceding year.
year if the services are performed under your pri-
You can choose to ignore test (2) if the employee was not
mary direction or control.
also in the top 20% of employees when ranked by pay for
•
A partner who performs services for a partnership.
the preceding year.
Employee. For this exclusion, treat the following individu-
Exclusion from wages. You can generally exclude the
als as employees.
value of an employee discount you provide an employee
•
A current employee.
from the employee’s wages, up to the following limits.
•
A former employee who retired, left on disability, or
•
For a discount on services, 20% of the price you
was laid off.
charge nonemployee customers for the service.
•
A leased employee who has provided services to
•
For a discount on merchandise or other property,
you on a substantially full-time basis for at least a
your gross profit percentage times the price you
year if the services are performed under your pri-
charge nonemployee customers for the property.
mary direction or control.
•
Yourself (if you are a sole proprietor).
Determine your gross profit percentage in the line of
business based on all property you offer to customers
•
A partner who performs services for a partnership.
(including employee customers) and your experience dur-
ing the tax year immediately before the tax year in which
Exclusion from wages. You can exclude up to $5,250 of
the discount is available. To figure your gross profit per-
educational assistance you provide to an employee under
centage, subtract the total cost of the property from the
an educational assistance program from the employee’s
total sales price of the property and divide the result by the
wages each year.
total sales price of the property.
Assistance over $5,250. If you do not have an educa-
Exception for highly compensated employees. You
tional assistance plan, or you provide an employee with
cannot exclude from the wages of a highly compensated
assistance exceeding $5,250, you can exclude the value
employee any part of the value of a discount that is not
of these benefits from wages if they are working condition
available on the same terms to one of the following groups.
benefits. Property or a service provided is a working condi-
•
tion benefit to the extent that if the employee paid for it, the
All of your employees.
amount paid would have been deductible as a business or
•
A group of employees defined under a reasonable
depreciation expense. See
Working Condition
Benefits,
classification you set up that does not favor highly
later in this section.
compensated employees.
Employee Discounts
For this exclusion, a highly compensated employee for
2012 is an employee who meets either of the following
This exclusion applies to a price reduction you give an
tests.
employee on property or services you offer to customers in
the ordinary course of the line of business in which the
1. The employee was a 5% owner at any time during
employee performs substantial services. However, it does
the year or the preceding year.
not apply to discounts on real property or discounts on
2. The employee received more than $115,000 in pay
personal property of a kind commonly held for investment
(such as stocks or bonds).
for the preceding year.
Publication 15-B (2012)
Page 11
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