Publication 15-B - Employer'S Tax Guide To Fringe Benefits - 2012 Page 9
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You can choose to ignore test (2) if the employee was not
A partner who performs services for a partnership.
also in the top 20% of employees when ranked by pay for
the preceding year.
You must exclude all payments or reimbursements you
De Minimis (Minimal) Benefits
make under an adoption assistance program for an em-
ployee’s qualified adoption expenses from the employee’s
You can exclude the value of a de minimis benefit you
wages subject to federal income tax withholding. However,
provide to an employee from the employee’s wages. A de
you cannot exclude these payments from wages subject to
minimis benefit is any property or service you provide to an
social security, Medicare, and federal unemployment
employee that has so little value (taking into account how
(FUTA) taxes. For more information, see the Instructions
frequently you provide similar benefits to your employees)
for Form 8839, Qualified Adoption Expenses.
that accounting for it would be unreasonable or administra-
You must report all qualifying adoption expenses you
tively impracticable. Cash and cash equivalent fringe ben-
paid or reimbursed under your adoption assistance pro-
efits (for example, use of gift card, charge card, or credit
gram for each employee for the year in box 12 of the
card), no matter how little, are never excludable as a de
employee’s Form W-2. Use code “T” to identify this
minimis benefit, except for occasional meal money or
amount.
transportation fare.
Examples of de minimis benefits include the following.
Exception for S corporation shareholders. For this ex-
clusion, do not treat a 2% shareholder of an S corporation
•
Personal use of an employer-provided cell phone
as an employee of the corporation. A 2% shareholder is
provided primarily for noncompensatory business
someone who directly or indirectly owns (at any time dur-
purposes. See
Employer-Provided Cell
Phones, later
ing the year) more than 2% of the corporation’s stock or
in this section, for details.
stock with more than 2% of the voting power. Treat a 2%
•
Occasional personal use of a company copying ma-
shareholder as you would a partner in a partnership for
chine if you sufficiently control its use so that at least
fringe benefit purposes, including using the benefit as a
85% of its use is for business purposes.
reduction in distributions to the 2% shareholder.
•
Holiday gifts, other than cash, with a low fair market
Athletic Facilities
value.
•
Group-term life insurance payable on the death of an
You can exclude the value of an employee’s use of an
employee’s spouse or dependent if the face amount
on-premises gym or other athletic facility you operate from
is not more than $2,000.
an employee’s wages if substantially all use of the facility
during the calendar year is by your employees, their
•
Meals. See Meals, later in this section, for details.
spouses, and their dependent children. For this purpose,
•
Occasional parties or picnics for employees and
an employee’s dependent child is a child or stepchild who
their guests.
is the employee’s dependent or who, if both parents are
deceased, has not attained the age of 25.
•
Occasional tickets for theater or sporting events.
On-premises facility. The athletic facility must be located
•
Transportation fare. See
Transportation (Commut-
on premises you own or lease. It does not have to be
ing)
Benefits, later in this section, for details.
located on your business premises. However, the exclu-
sion does not apply to an athletic facility for residential use,
Employee. For this exclusion, treat any recipient of a de
such as athletic facilities that are part of a resort.
minimis benefit as an employee.
Employee. For this exclusion, treat the following individu-
als as employees.
Dependent Care Assistance
•
A current employee.
This exclusion applies to household and dependent care
•
A former employee who retired or left on disability.
services you directly or indirectly pay for or provide to an
•
employee under a dependent care assistance program
A widow or widower of an individual who died while
that covers only your employees. The services must be for
an employee.
a qualifying person’s care and must be provided to allow
•
A widow or widower of a former employee who re-
the employee to work. These requirements are basically
tired or left on disability.
the same as the tests the employee would have to meet to
•
claim the dependent care credit if the employee paid for
A leased employee who has provided services to
the services. For more information, see Qualifying Person
you on a substantially full-time basis for at least a
year if the services are performed under your pri-
Test and Work-Related Expense Test in Publication 503,
mary direction or control.
Child and Dependent Care Expenses.
Publication 15-B (2012)
Page 9
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