Overview: Fringe benefits, such as health benefits, company cars, commuter transportation benefits and educational assistance plans, just to name a few, are the icing on the cake in attracting and retaining high quality employees. In this heavily regulated area, however, employers must stay abreast of frequent payroll tax law changes to prevent an otherwise tax-free fringe benefit from becoming fully taxable. Employers must also look out for changes to the special payroll tax rules that apply to other common types of payments such bonuses, severance pay and back pay.
Author: Rena Pirsos, JD, Legal Editor
The Taxation of Employee Compensation section of the Employment Law Manual has been updated to reflect several fourth-quarter 2015 developments.
This section helps HR and payroll professionals to understand how particular types of benefit plans must be structured and how to properly tax and report contributions, reimbursements and distributions in order to ensure compliance with the Internal Revenue Code.
This section helps HR and payroll professionals comply with the federal income and employment tax laws governing compensation paid, and fringe benefits provided, to employees.
The Quick Reference chart, Annual Retirement Plan COLAs and Fringe Benefit Limitations, has been updated with the 2016 Fringe Benefit Inflation Adjustments.
This chart provides employers with a comparison of the current and prior year retirement plan cost of living adjustments and fringe benefit limitations. It helps employers ensure that they are withholding the correct amount of taxes from the pay of employees who receive various benefits. The chart will be updated annually when new amounts are announced by the Internal Revenue Service, which is usually by the end of October.
The Internal Revenue Service (IRS) has announced the tax year 2016 cost-of-living adjustments affecting dollar limitations on benefits and contributions under qualified retirement plans and other inflation-adjusted amounts. The pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment
The IRS has announced the 2016 annual cost-of-living adjustments made to several employee benefits and taxable amounts, based on changes to the Consumer Price Index. These are the maximum amounts that may be excluded in 2016 from an employee's taxable income for specific benefits.
The IRS has issued Notice 2015-63 announcing the annual list of "optional high-low" federal per diem rates, effective for travel undertaken on or after October 1, 2015 .
Payroll tax laws affecting fringe benefits and other common employer payments.