Overview: Most employers offer several different types of employee benefits, such as health insurance, sick pay, disability pay, workers' compensation insurance and retirement savings plans. Whether employer and employee contributions and benefit payments received by employees are subject to withholding for certain payroll taxes, such as federal income tax (FIT), Social Security and Medicare (FICA) taxes or federal unemployment (FUTA) tax, varies among benefit types.
Trends: The following important issues will affect the taxation of employee benefits in 2015!
Author: Rena Pirsos, JD, Legal Editor
Updated with new IRC reference dates for Arizona, Hawaii, Indiana, Iowa, Kentucky, Maine, Oregon and South Carolina.
Updated to include 2016 foreign housing-cost exclusion limitation and base housing amount.
Updated to reflect a decrease in the foreign housing-cost exclusion amount for 2016.
Updated to include the terminal charge and SIFL mileage rates for the first half of 2016.
This How To shows employers how to withhold on supplemental wages using the aggregate method.
In Notice 2016-06, the IRS provides correction procedures for fourth quarter Forms 941 and Forms W-2, in light of the retroactive increase in the 2015 monthly transit benefit limit under the PATH Act of 2015.
The Taxation of Employee Benefits section of the Employment Law Manual has been updated to include a number of important legislative and regulatory changes that occurred at the end of 2015, such as Affordable Care Act reporting and filing deadline changes.
The Depositing and Reporting Withheld Taxes section of the Employment Law Manual has been updated to include a number of important legislative and regulatory changes that occurred at the end of 2015, such as Form W-2 filing deadline changes.
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.
President Obama has signed an omnibus appropriations bill (H.R. 2029) that will significantly impact payroll operations. The Protecting Americans From Tax Hikes Act of 2015 (PATH Act), which represents half of the bill, permanently extends parity between qualified (tax-free) employer-provided parking and commuter benefits and substantially revises the rules for filing Forms W-2, Wage and Tax Statement, and 1099-MISC, Miscellaneous Income. The Consolidated Appropriations Act of 2016, which is the other half of the omnibus bill, amends the Affordable Care Act.
HR guidance on the taxation of employee benefits.