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Department of the Treasury Internal Revenue Service Contents What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 2 2 2 2 3 6 6 7 7 8 8 9 9 10 10 12 13 14 15 16 16 17 18 18 19 20 20 21 21 23 Publication 15-B Cat. No. 29744N Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Fringe Benefit Overview . . . . . . . . . . . . . . . . . . . Are Fringe Benefits Taxable? . . . .
  Contents Department of the Treasury Internal Revenue ServiceWhat’s New ............................... 1Reminders ................................ 2 Publication 15-B Introduction .............................. 2 Cat.No.29744N 1. Fringe Benefit Overview ................... 2 Are Fringe Benefits Taxable?............... 2 Cafeteria Plans.......................... 2 Employer’s 2. Fringe Benefit Exclusion Rules ............. 3 Accident and Health Benefits............... 6 Tax Guide to Achievement Awards..................... 6 Adoption Assistance...................... 7 Athletic Facilities......................... 7 Fringe De Minimis (Minimal) Benefits............... 8 Dependent Care Assistance................ 8 Benefits Educational Assistance................... 9 Employee Discounts...................... 9 Employee Stock Options.................. 10 Group-Term Life Insurance Coverage......... 10 For use in 2008 Health Savings Accounts.................. 12 Lodging on Your Business Premises......... 13 Meals................................. 14 Moving Expense Reimbursements........... 15 No-Additional-Cost Services................ 16 Retirement Planning Services............... 16 Transportation (Commuting) Benefits......... 17 Tuition Reduction........................ 18 Working Condition Benefits................. 183. Fringe Benefit Valuation Rules ............. 19 General Valuation Rule................... 20 Cents-Per-Mile Rule...................... 20 Commuting Rule......................... 21 Lease Value Rule........................ 21 Unsafe Conditions Commuting Rule.......... 234. Rules for Withholding, Depositing, andReporting ............................. 24How To Get Tax Help ....................... 25Index .................................... 28 What’s New Cents-per-mile rule. The standard mileage rate you can Get forms and other information use under the cents-per-mile rule to value the personal use faster and easier by: of a vehicle you provide to an employee in 2008 is 50.5cents per mile. See Cents-Per-Mile Rule  in section 3. Internet ã www.irs.gov Increase in qualified parking exclusion and commutertransportation benefit. For 2008, the monthly exclusionfor qualified parking increases to $220 and the monthly TM for Business exclusion for commuter highway vehicle transportation www.irs.gov/efile and transit passes increases to $115. See Qualified Trans- portation Benefits  on page 17.  Recipient of benefit. The person who performs servicesfor you is the recipient of a fringe benefit provided for those Reminders services. That person may be the recipient even if thebenefit is provided to someone who did not perform serv- Photographs of missing children. The Internal Reve-ices for you. For example, your employee may be thenue Service is a proud partner with the National Center forrecipient of a fringe benefit you provide to a member of theMissing and Exploited Children. Photographs of missingemployee’s family.children selected by the Center may appear in this publica-tion on pages that would otherwise be blank. You can helpbring these children home by looking at the photographs Are Fringe Benefits Taxable? and calling 1-800-THE-LOST (1-800-843-5678) if you rec-ognize a child.Any fringe benefit you provide is taxable and must beincluded in the recipient’s pay unless the law specificallyexcludes it. Section 2 discusses the exclusions that applyto certain fringe benefits. Any benefit not excluded under Introduction the rules discussed in section 2 is taxable.This publication supplements Publication 15 (Circular E),Employer’s Tax Guide, and Publication 15-A, Employer’s Including taxable benefits in pay. You must include in aSupplemental Tax Guide. It contains information for em-recipient’s pay the amount by which the value of a fringeployers on the employment tax treatment of fringe benefits.benefit is more than the sum of the following amounts. Comments and suggestions. We welcome your com- ã Any amount the law excludes from pay.ments about this publication and your suggestions for ã Any amount the recipient paid for the benefit.future editions.You can write to us at the following address:The rules used to determine the value of a fringe benefitare discussed in section 3.Internal Revenue ServiceIf the recipient of a taxable fringe benefit is your em-Business Forms and Publications Branchployee, the benefit is subject to employment taxes andSE:W:CAR:MP:T:Bmust be reported on Form W-2, Wage and Tax Statement.1111 Constitution Ave. NW, IR-6526However, you can use special rules to withhold, deposit,Washington, DC 20224and report the employment taxes. These rules are dis-cussed in section 4.If the recipient of a taxable fringe benefit is not yourWe respond to many letters by telephone. Therefore, itwould be helpful if you would include your daytime phoneemployee, the benefit is not subject to employment taxes.number, including the area code, in your correspondence.However, you may have to report the benefit on one of theYou can email us at *taxforms@irs.gov  . (The asteriskfollowing information returns.must be included in the address.) Please put “Publications If the recipient Comment” on the subject line. Although we cannot re- receives the benefit as:Use: spond individually to each email, we do appreciate your An independent contractorForm 1099-MISC feedback and will consider your comments as we reviseour tax products. A partnerSchedule K-1 (Form 1065) For more information, see the instructions for the forms 1. Fringe Benefit Overview listed above.A fringe benefit is a form of pay for the performance of Cafeteria Plans services. For example, you provide an employee with afringe benefit when you allow the employee to use aA cafeteria plan, including a flexible spending arrange-business vehicle to commute to and from work.ment, is a written plan that allows your employees tochoose between receiving cash or taxable benefits instead Performance of services. A person who performs serv-of certain qualified benefits for which the law provides anices for you does not have to be your employee. A personexclusion from wages. If an employee chooses to receive amay perform services for you as an independent contrac-qualified benefit under the plan, the fact that the employeetor, partner, or director. Also, for fringe benefit purposes,could have received cash or a taxable benefit instead willtreat a person who agrees not to perform services (such asnot make the qualified benefit taxable.under a covenant not to compete) as performing services.Generally, a cafeteria plan does not include any planthat offers a benefit that defers pay. However, a cafeteria Provider of benefit. You are the provider of a fringeplan can include a qualified 401(k) plan as a benefit. Also,benefit if it is provided for services performed for you. Youcertain life insurance plans maintained by educational in-may be the provider of the benefit even if it was actuallystitutions can be offered as a benefit even though theyfurnished by another person. You are the provider of adefer pay.fringe benefit your client or customer provides to youremployee for services the employee performs for you.Page 2 Publication15-B(2008)  Qualified benefits. A cafeteria plan can include the fol- Plans that favor highly compensated employees. Iflowing benefits discussed in section 2.your plan favors highly compensated employees as toeligibility to participate, contributions, or benefits, you must ã Accident and health benefits (but not Archer medicalinclude in their wages the value of taxable benefits theysavings accounts (Archer MSAs) or long-term carecould have selected. A plan you maintain under a collec-insurance).tive bargaining agreement does not favor highly compen- ã Adoption assistance.sated employees. ã Dependent care assistance.A highly compensated employee for this purpose is any ã Group-term life insurance coverage (including costsof the following employees.that cannot be excluded from wages).1.An officer. ã Health savings accounts (HSAs). Distributions from2.A shareholder who owns more than 5% of the votingan HSA may be used to pay eligible long-term carepower or value of all classes of the employer’s stock.insurance premiums or qualified long-term care serv-ices.3.An employee who is highly compensated based onthe facts and circumstances. Benefits not allowed. A cafeteria plan cannot include4.A spouse or dependent of a person described in (1),the following benefits discussed in section 2.(2), or (3). ã Archer MSAs. (See Accident and Health Benefits. ) ã Athletic facilities. Plans that favor key employees. If your plan favors key ã De minimis (minimal) benefits.employees, you must include in their wages the value oftaxable benefits they could have selected. A plan favors ã Educational assistance.key employees if more than 25% of the total of the nontax- ã Employee discounts.able benefits you provide for all employees under the plan ã Lodging on your business premises.go to key employees. However, a plan you maintain undera collective bargaining agreement does not favor key em- ã Meals.ployees. ã Moving expense reimbursements.A key employee during 2008 is generally an employee ã No-additional-cost services.who is either of the following. ã Transportation (commuting) benefits.1.An officer having annual pay of more than $150,000. ã Tuition reduction.2.An employee who for 2008 was either of the follow- ã Working condition benefits.ing.a.A 5% owner of your business.It also cannot include scholarships or fellowships (dis-cussed in Publication 970, Tax Benefits for Education).b.A 1% owner of your business whose annual paywas more than $150,000. Employee. For these plans, treat the following individualsas employees. ã A current common-law employee (see section 2 in More information. For more information about cafeteriaPublication 15 (Circular E) for more information).plans, see section 125 of the Internal Revenue Code and ã A full-time life insurance agent who is a current stat-its regulations.utory employee. ã A leased employee who has provided services toyou on a substantially full-time basis for at least a 2. Fringe Benefit Exclusion year if the services are performed under your pri-mary direction or control. Rules Exception for S corporation shareholders. Do notThis section discusses the exclusion rules that apply totreat a 2% shareholder of an S corporation as an employeefringe benefits. These rules exclude all or part of the valueof the corporation for this purpose. A 2% shareholder forof certain benefits from the recipient’s pay.this purpose is someone who directly or indirectly owns (atany time during the year) more than 2% of the corpora-The excluded benefits are not subject to federal incometion’s stock or stock with more than 2% of the voting power.tax withholding. Also, in most cases, they are not subject toTreat a 2% shareholder as you would a partner in asocial security, Medicare, or federal unemploymentpartnership for fringe benefit purposes, but do not treat the(FUTA) tax and are not reported on Form W-2.benefit as a reduction in distributions to the 2% share-holder. Publication15-B(2008) Page 3  This section discusses the exclusion rules for the follow- ã Health savings accounts (HSAs).ing fringe benefits. ã Lodging on your business premises. ã Accident and health benefits. ã Meals. ã Achievement awards. ã Moving expense reimbursements. ã Adoption assistance. ã No-additional-cost services. ã Athletic facilities. ã Retirement planning services. ã De minimis (minimal) benefits. ã Transportation (commuting) benefits. ã Dependent care assistance. ã Tuition reduction. ã Educational assistance. ã Working condition benefits. ã Employee discounts.See Table 2-1 for an overview of the employment tax ã Employee stock options.treatment of these benefits. ã Group-term life insurance coverage.Page 4 Publication15-B(2008)
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