Publication 15-B - Employer'S Tax Guide To Fringe Benefits - 2012 Page 3
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33•
to certain fringe benefits. Any benefit not excluded under
Dependent care assistance.
the rules discussed in section 2 is taxable.
•
Group-term life insurance coverage (including costs
that cannot be excluded from wages).
Including taxable benefits in pay. You must include in a
recipient’s pay the amount by which the value of a fringe
•
Health savings accounts (HSAs). Distributions from
benefit is more than the sum of the following amounts.
an HSA may be used to pay eligible long-term care
•
insurance premiums or qualified long-term care serv-
Any amount the law excludes from pay.
ices.
•
Any amount the recipient paid for the benefit.
The rules used to determine the value of a fringe benefit
Benefits not allowed. A cafeteria plan cannot include
are discussed in section 3.
the following benefits discussed in section 2.
If the recipient of a taxable fringe benefit is your em-
•
Archer MSAs. See
Accident and Health Benefits
in
ployee, the benefit is subject to employment taxes and
section 2.
must be reported on Form W-2, Wage and Tax Statement.
•
Athletic facilities.
However, you can use special rules to withhold, deposit,
and report the employment taxes. These rules are dis-
•
De minimis (minimal) benefits.
cussed in section 4.
•
Educational assistance.
If the recipient of a taxable fringe benefit is not your
employee, the benefit is not subject to employment taxes.
•
Employee discounts.
However, you may have to report the benefit on one of the
•
Employer-provided cell phones.
following information returns.
•
Lodging on your business premises.
If the recipient
receives the benefit
•
Meals.
as:
Use:
•
Moving expense reimbursements.
An independent
Form 1099-MISC, Miscellaneous Income
contractor
•
No-additional-cost services.
A partner
Schedule K-1 (Form 1065), Partner’s
•
Transportation (commuting) benefits.
Share of Income, Deductions, Credits, etc.
•
Tuition reduction.
For more information, see the instructions for the forms
•
Working condition benefits.
listed above.
It also cannot include scholarships or fellowships (dis-
Cafeteria Plans
cussed in Publication 970, Tax Benefits for Education).
A cafeteria plan, including a flexible spending arrange-
Employee. For these plans, treat the following individuals
ment, is a written plan that allows your employees to
choose between receiving cash or taxable benefits instead
as employees.
of certain qualified benefits for which the law provides an
•
A current common-law employee. See section 2 in
exclusion from wages. If an employee chooses to receive a
Publication 15 (Circular E) for more information.
qualified benefit under the plan, the fact that the employee
•
could have received cash or a taxable benefit instead will
A full-time life insurance agent who is a current stat-
not make the qualified benefit taxable.
utory employee.
Generally, a cafeteria plan does not include any plan
•
A leased employee who has provided services to
that offers a benefit that defers pay. However, a cafeteria
you on a substantially full-time basis for at least a
plan can include a qualified 401(k) plan as a benefit. Also,
year if the services are performed under your pri-
certain life insurance plans maintained by educational in-
mary direction or control.
stitutions can be offered as a benefit even though they
defer pay.
Exception for S corporation shareholders. Do not
treat a 2% shareholder of an S corporation as an employee
Qualified benefits. A cafeteria plan can include the fol-
of the corporation for this purpose. A 2% shareholder for
lowing benefits discussed in section 2.
this purpose is someone who directly or indirectly owns (at
•
Accident and health benefits (but not Archer medical
any time during the year) more than 2% of the corpora-
savings accounts (Archer MSAs) or long-term care
tion’s stock or stock with more than 2% of the voting power.
insurance).
Treat a 2% shareholder as you would a partner in a
•
partnership for fringe benefit purposes, but do not treat the
Adoption assistance.
Publication 15-B (2012)
Page 3
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