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 Patient Protection and Affordable Care Act (PPACA) of 2010 includes several new payroll related provisions that employers are required to comply with starting in January 2013 and beyond:
Author: Rena Pirsos, JD, Legal Editor
The optional standard mileage rates used to calculate the deductible cost of operating a vehicle for business, charitable, and medical or moving purposes, and the company fleet maximum valuation amounts, have changed for 2014.
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.
Health Care Benefits and Taxation of Employee Benefits sections updated as a result of changes to the "Use It or Lose It" Rule for Health FSAs.
This Quick Reference 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.
Employee benefits, such as health insurance, sick pay, disability pay, workers' compensation insurance and retirement savings plans, may be subject to withholding for federal income taxes (FIT), Social Security and Medicare (FICA) taxes or federal unemployment (FUTA) taxes. This section assists HR professionals in understanding how each particular type of benefit plan must be structured and how to properly tax and report contributions, reimbursements and distributions in order to ensure compliance with the Internal Revenue Code.
A new Annual Retirement Plan COLAs and Fringe Benefit Limitations - Chart has been added to the Quick Reference Tool. The chart provides employers with a comparison of the current and prior year retirement plan cost of living adjustments (COLAs) and fringe benefit limitations.
The US Department of Treasury and the Internal Revenue Service issued a new rule modifying the "use it or lose it" rule for FSAs. The change to the long-standing "use it or lose it" rule, issued on October 31, 2013, is effective immediately.
The IRS has announced the annual cost-of-living adjustments made to several employee benefits and taxable amounts. These are the maximum amounts that may be excluded in 2014 from an employee's taxable income for specific benefits.
The Taxation of Employee Benefits: California section of the Employment Law Manual has been updated with the discussion of a new law - the Same-Sex Couple Tax Fairness Act. The new law is effective immediately and applies for tax years beginning on or after January 1, 2013 through December 31, 2018.
The Taxation of Employee Benefits section of the Employment Law Manual has been updated, in the Nontraditional Living Arrangements subsection, with an explanation of IRS Notice 2013-61, which further implements the recent Supreme Court decision on same-sex marriage in United States v. Windsor.
HR guidance on the taxation of employee benefits.