Archive
By Staff Report
Jul. 12, 1999
Issue: The Internal Revenue Code, IRS regulations and other IRS pronouncements spell out the treatment of various types of fringe benefits under the three types of employment taxes-FICA, FUTA, and income tax withholding. The chart below is designed to provide a quick reference to the employment tax treatment of various fringe benefits. In noting that a particular benefit is exempt from the employment taxes, it is assumed that the employer has complied with any special rules concerning such matters as nondiscrimination and recordkeeping.
| Income tax withholding | Social security | Federal unemployment |
Airplanes, business use | Exempt | Exempt | Exempt |
Athletic facilities | Exempt | Exempt | Exempt |
Awards and prizes | Generally taxable | Generally taxable | Generally taxable |
Business expense reimbursement | Exempt | Exempt | Exempt |
Cafeteria plans | Generally exempt | Generally exempt | Generally exempt |
Cars, business use | Exempt | Exempt | Exempt |
Commuter vehicles | Taxable | Taxable | Taxable |
Computers, business use | Exempt | Exempt | Exempt |
Conventions for business | Exempt | Exempt | Exempt |
De minimis benefits | Exempt | Exempt | Exempt |
Dependent care (limited to $5000) | Exempt | Exempt | Exempt |
Discounts | Exempt | Exempt | Exempt |
Education, business related | Exempt | Exempt | Exempt |
Educational assistance | Exempt | Exempt | Exempt |
Employee achievement awards | Exempt to extent it is reasonable to believe the amounts will be excludable from gross income under Code Sec. 74c | ||
Health and accident insurance | Exempt | Exempt | Exempt |
Home offices | Exempt if reimbursed home office expenses qualify as a working condition fringe benefit. | ||
Legal service, group plans | Exempt (up to a premium value of $70 annually) for tax years beginning before July 1, 1992. | ||
Life insurance premiums (first $50,000 in coverage) | Taxable | Taxable | Exempt |
Loans with below market interest rates | Exempt (deemed payment must be shown on W-2) | Exempt (unless loans are compensation related). | Exempt (unless loans are compensation related). |
Maternity/paternity benefits | Taxable during first six months of absence. Payments made after six months are exempt. | ||
Meals/lodging on employer’s premises for employer’s convenience. | Exempt | Exempt | Exempt |
Moving expenses | Exempt, if employer believes expenses are deductible by employee. | ||
No-additional-cost service | Exempt | Exempt | Exempt |
Parking facilities | Exempt | Exempt | Exempt |
Product testing | Exempt | Exempt | Exempt |
Security | Exempt | Exempt | Exempt |
Supplemental unemployment compensation plan benefits | Taxable | Exempt | Exempt |
Travel, business purpose | Exempt | Exempt | Exempt |
Tuition reduction | Exempt | Exempt | Exempt |
Uniforms | Exempt | Exempt | Exempt |
Vacation pay | Taxable | Taxable | Taxable |
Workers’ compensation | Exempt | Exempt | Exempt |
Working condition benefits | Exempt | Exempt | Exempt |
Source: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online and via the Internet. For more information and other updates on the latest HR news, check our Web site at http://hr.cch.com.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.
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