Overview: Fringe benefits, such as health benefits, company cars, commuter transportation benefits and educational assistance plans, just to name a few, are the icing on the cake in attracting and retaining high quality employees. In this heavily regulated area, however, employers must stay abreast of frequent payroll tax law changes to prevent an otherwise tax-free fringe benefit from becoming fully taxable. Employers must also look out for changes to the special payroll tax rules that apply to other common types of payments such bonuses, severance pay and back pay.
Author: Rena Pirsos, JD, Legal Editor
Updated to reflect cost-of-living adjustments under IRS Rev. Proc. 2018-18 regarding adoption assistance, MSAs, HSAs, and the foreign earned income and housing cost exclusions, effective January 1, 2018.
Updated to include the terminal charge and SIFL mileage rates for the first half of 2018.
Updated to reflect the effect of federal tax reform legislation on certain benefits provided to same-sex married couples, effective January 1, 2018.
This chart provides a before-and-after comparison of the status of the payroll and benefits provisions affected by the sweeping tax reform legislation signed by President Trump on December 22, 2017. The changes are effective January 1, 2018, unless noted otherwise.
A Quick Reference chart has been added to XpertHR to help an employer comply with the sweeping tax reform law signed by President Trump on December 22, 2017. The legislation affects an employer's legal compliance with several key payroll, fringe benefit, ACA and other employment law provisions.
On Saturday, the Senate passed its version of historic, sweeping tax reform legislation known as the Tax Cuts and Jobs Act (H.R. 1). The massive, 500-page bill will have a drastic effect on the employment tax treatment of many core employee benefits starting January 1, 2018.
The IRS has released the 2018 cost-of-living adjustments (COLAs) to the dollar limitations on benefits and contributions to qualified retirement and deferred contribution plans, such as § 401(k) plans, and the inflation-adjusted fringe benefit limitations.
In an information letter, the IRS concludes that benefits an employer provides under its company parking policy are taxable income to the employees that choose to use the benefit.
Payroll tax laws affecting fringe benefits and other common employer payments.