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 2014!
Author: Rena Pirsos, JD, Legal Editor
The IRS has announced the 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 2015 from an employee's taxable income for specific benefits.
The Internal Revenue Service has announced the tax year 2015 cost-of-living adjustments affecting dollar limitations on benefits and contributions under qualified retirement plans and other inflation-adjusted amounts. Many of the pension plan limitations will increase for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. Other limitations will not change because the relevant thresholds were not met.
The US Supreme Court declined to review challenges to three federal appeals court rulings striking down same-sex marriage bans in Indiana, Oklahoma, Utah, Virginia and Wisconsin, which also cleared the way for the legalization of same-sex marriage in Colorado, North Carolina, West Virginia and Wyoming. Bans also fell in Alaska, Arizona, Idaho and Nevada.
Employers must file the new Form 8922, Third-Party Sick Pay Recap, by February 28, 2015, in order to reconcile agent or insurer payments of sick pay to employees reported on Forms 941 and W-2.
Employers will be required to file new Form 8922, Third-Party Sick Pay Recap, for sick pay paid to employees by a third-party agent or insurer in 2014 in order to reconcile Forms 941, Employer's Quarterly Federal Tax Return, and Forms W-2, Wage and Tax Statement. Previously, a third-party payer of sick pay filed recap Form W-2, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration.
A federal district court upheld Louisiana's statute and constitutional amendment banning same-sex marriage, while a Louisiana state court ruled that these laws are unconstitutional.
The value of health insurance benefits provided to an employee's same-sex spouse or partner and their dependents is taxable in Louisiana.
The 7th Circuit Court of Appeals upheld recent lower court decisions invalidating Indiana's and Wisconsin's laws banning same-sex marriage.
The value of health insurance benefits provided to an employee's same-sex spouse or partner, and/or their dependents, is taxable in Indiana.
HR guidance on the taxation of employee benefits.