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 have an effect on the taxation of employee benefits:
Author: Rena Pirsos, JD, Legal Editor
The IRS has issued Notice 2016-58 listing the 2016-2017 optional 'high-low' federal per diem rates an employer may use to reimburse expenses incurred by employees who travel on business to locations within the Continental US, and the 'special' federal meals and incidental expenses (M&IE) per diem rates that apply to the transportation industry and the incidental-expenses-only rate.
On September 2, the IRS released immediately effective final regulations that define the term "spouse" in a gender-neutral manner under federal law. The regulations follow up on two Supreme Court decisions that have recognized same-sex marriage at the federal and state levels since 2013.
Updated to include the terminal charge and SIFL mileage rates for the second half of 2016, and the federal standard per diem rates for fiscal year 2017.
Certain District of Columbia employers are required to offer employees tax- or cost-free commuter benefits. Certain employers in New Jersey and Connecticut must comply with the New York City commuter benefits law if they have employees working in New York City.
In-depth review of the spectrum of District of Columbia employment law requirements HR must follow with respect to taxation of employee compensation.
In-depth review of the spectrum of New Jersey employment law requirements HR must follow with respect to taxation of employee compensation.
In-depth review of the spectrum of Connecticut employment law requirements HR must follow with respect to taxation of employee compensation.
Enhanced by the addition of a new law in New York City requiring employers to offer commuter benefits to full-time employees, enforced as of July 1, 2016.
HR guidance on the taxation of employee benefits.