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
Some states that require employers to withhold income taxes from employees' wages tie their definitions of "wages" to the federal Internal Revenue Code (IRC). However, many states update their IRC references to a specific date every year or so, while others roll their references into the current version of the IRC. Even with IRC conformity, some states have important exceptions. This Quick Reference chart summarizes each state's IRC conformity reference.
The Pulaski County Circuit Court has ordered Arkansas to recognize the same-sex marriages performed in the state between May 9 and May 16, 2014.
The value of health insurance benefits provided to an employee's same-sex spouse or partner, and/or their dependents, is taxable in Arkansas.
Despite the DOMA decision handed down by the Supreme Court in Windsor, state laws still vary greatly regarding both the recognition of same-sex marriage and the taxation of benefits provided to an employee's same-sex spouse by an employer. This Quick Reference chart summarizes federal and state law regarding whether same-sex marriages, civil unions and/or domestic partnerships are recognized, and whether the value of benefits provided by an employer to an employee's same-sex spouse or civil union or domestic partner is taxable. This chart will be updated when any changes in these laws occur.
Effective July 1, 2015, an Indiana employer may be required to withhold from an employee's pay for an unemployment benefits overpayment and may not discriminate against an employee because of income withholding.
This section helps HR and payroll professionals understand the laws and regulations that must be complied with when employees are sent to work abroad or are brought from abroad to work in the US.
The IRS has released the inflation-adjusted, calendar-year 2016 amounts for high-deductible health plans (HDHPs) and health savings accounts (HSAs), as determined under § 223 of the Internal Revenue Code.
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.
HR guidance on the taxation of employee benefits.