Fringe Benefits and Other Payments

Nontaxable GTL insurance coverage amount is:

$50,000

Federal business standard mileage rate:

$0.535 PER MILE. EMPLOYEES CAN BE REIMBURSED FOR BUSINESS MILES DRIVEN IN A PERSONAL VEHICLE UP TO $0.535 PER MILE WITHOUT TAXATION.

A nonexempt assembly line worker, who is paid biweekly, works the following hours during the pay period: Week 1: * First shift at $12.00 per hour; 27 hours * Second shift at $14.00 per hour; 16 hours Week 2: * First shift at $12.00 per hour; 10 hours * Third shift at $16.00 per hour; 37 hours During this pay period, the payroll department imputes the monthly amount of the employee's Group-Term Life Insurance benefit valued at $7.32. Determine the total taxable compensation for the employee for this pay period.

$1,339.49 An employee's taxable compensation equals cash compensation, including overtime compensation, and taxable fringe benefits such as excess group-term life insurance, personal use of a company vehicle, and other benefits.

An employer pays for an employee's $271.00 monthly parking near the job site. Calculate the taxable amount of the monthly parking.

$16.00 Under IRS qualified transportation fringe benefit rules, the fair market value of parking near the employee's job site or at a park and ride in excess of the monthly exclusion ($255.00 in 2017) is the monthly taxable value.

An employee, qualifying for the cents-per-mile method, drove a company vehicle 7,600 miles on business and 5,800 miles for personal use. Calculate the employee's income for the personal use of the vehicle using the cents-per-mile method.

$3,103.00 When using the cents-per-mile valuation method, the taxable amount is calculated by multiplying the IRS standard business mileage rate ($0.535 in 2017) by the personal miles driven. However, the cents-per-mile method cannot be used when the value of the vehicle exceeds the luxury vehicle value ($15,900.00 in 2017).

An employee rides 600 miles monthly to work in a company provided 7-passenger van used exclusively for commuting. The employer has organized a vanpool, offering rides to four other employees. The employer uses the cents-per-mile method to determine the value of the commute. Calculate the amount of the benefit that is taxable.

$66.00 600 * .535 - 321 = 66.00 Under IRS rules, when an employer provides the qualified transportation fringe benefit in a vanpool the special valuation method used to determine the value of the personal of a company vehicle -- cents per mile ($0.535 per mile) -- may be used to determine the fair-market value of the benefit. The qualified transportation fringe benefit's monthly exclusion is $255.00. Amounts in excess of $255.00 per month are taxable.

What is a de minimis fringe benefit?

A DE MINIMIS FRINGE BENEFIT IS A BENEFIT OF SMALL VALUE, DIFFICULT TO TRACK, AND OCCASIONALLY PROVIDED THAT IS EXCLUDED FROM THE EMPLOYEE'S INCOME. GENERALLY DE MINIMIS FRINGE BENEFITS CANNOT BE CASH.

A no-additional cost benefit is:

A NO-ADDITIONAL COST BENEFIT IS A NONTAXABLE BENEFIT PROVIDED BY AN EMPLOYER. THE BENEFIT MUST BE A SERVICE SOLD TO CUSTOMERS AND PROVIDED TO EMPLOYEES WITH NO SUBSTANTIAL COST TO THE EMPLOYER.

Nontaxable moving expenses require:

A QUALIFIED (NONTAXABLE) MOVING EXPENSE MUST MEET THE TIME AND DISTANCE TEST. NONTAXABLE MOVING EXPENSES ARE TRANSPORTATION OF THE HOUSEHOLD GOODS AND TRANSPORTATION TO THE NEW HOME.

A qualified employee discount is:

A QUALIFIED EMPLOYEE DISCOUNT IS A NONTAXABLE BENEFIT WHEN THE EMPLOYER SELLS A PRODUCT OR SERVICE TO AN EMPLOYEE AT A DISCOUNT. THE DISCOUNT IS LIMITED BASED ON THE TYPE OF PRODUCT OR SERVICE SOLD.

A working condition benefit is:

A WORKING CONDITION FRINGE BENEFIT IS A NONTAXABLE BENEFIT WHICH RELATES TO THE EMPLOYEE'S TRADE OR BUSINESS PROVIDED TO AN EMPLOYEE.

What is a §83(b) election?

A §83(B) ELECTION ALLOWS THE EMPLOYEE THE ABILITY TO HAVE THE FMV OF THE STOCK INCLUDED IN INCOME FOR INCOME, SOCIAL SECURITY, AND MEDICARE TAXES.ON THE DATE OF THE GRANT OF THE RESTRICTED STOCK.

What is taxable compensation?

ALL OF AN EMPLOYEE'S COMPENSATION, IN WHATEVER FORM, IS TAXABLE UNLESS SPECIFICALLY EXCLUDED BY LAW.

How are allocated tips reported?

ALLOCATED TIPS ARE CALCULATED ON FORM 8027, EMPLOYER'S ANNUAL REPORT OF TIP INCOME, AND REPORTED ON THE EMPLOYEE'S FORM W-2 IN BOX 8.

An employer relocates an employee 1,500 miles away. The employee meets the time test. Which of the following moving expenses is taxable? A) $750 in airfare for the move to the new location B) $75 in meals while traveling to the new location C) $100 for a hotel room while traveling to the new location D) $1,100 for 25 days of storage after arriving in the new location

B) $75 in meals while traveling to the new location Under IRS rules, expenses excluded from income during a qualified move are: 1) Moving the household goods from the old home to the new home, including storage of the household goods for up to 30 days, and 2) The cost of moving the family from the old home to the new home (except meals). Mileage up to $0.17 per mile is also excluded from income.

Bonuses are:

BONUSES ARE TAXABLE FOR INCOME, SOCIAL SECURITY, MEDICARE, AND FUTA TAXATION. BONUSES ARE SUPPLEMENTAL WAGES.

Last month, an employee typed a personal letter and photocopied 50 fliers for a club's garage sale using company equipment. The employee also purchased gifts using the company's Internet connection. The IRC defines these services as: A) no-additional-cost services. B) working condition fringes. C) de minimis fringes. D) taxable compensation.

C) de minimis fringes The IRC defines nontaxable de minimis fringe benefits as small value items, provided occasionally to the employee. Occasional use of the company's copy machine and internet connection are de minimis fringe benefits.

Commissions are:

COMMISSIONS ARE TAXABLE FOR INCOME, SOCIAL SECURITY, MEDICARE, AND FUTA TAXATION. COMMISSIONS ARE SUPPLEMENTAL WAGES.

An employee drove a company vehicle 5,000 miles for business and 6,000 miles for personal use. The car is valued at $27,500.00. Which of the following statements regarding the employee's use of this vehicle is true? A_Using the cents-per-mile method, the employee's personal use of the vehicle is valued at $3,210.00. B) The employer must withhold federal income tax on the personal use of the vehicle. C) The employer must calculate the personal use of the vehicle using the cents-per-mile method. D) Employers are required to report the value of the personal use of the vehicle at least once a year.

D) Employers are required to report the value of the personal use of the vehicle at least once a year. Under IRS rules, the value of the personal use of a company vehicle must be included in income at least once a year. It is the employer's option whether to withhold income tax. When using the cents-per-mile valuation method, the value of the vehicle cannot exceed the luxury vehicle value, ($15,900.00 in 2017).

Moving expense time test is:

DURING THE 12-MONTHS AFTER THE MOVE, THE EMPLOYER REASONABLY EXPECTS THE EMPLOYEE TO WORK FULL-TIME FOR AT LEAST 39 WEEKS.

Nontaxable use of company vehicle:

NONTAXABLE USE OF COMPANY VEHICLES INCLUDE BUSINESS USE, DE MINIMIS USE, QUALIFIED NONPERSONAL USE VEHICLES, AND CERTAIN AUTOMOBILE SALESPERSONS' USE.

Which of the following benefits is subject to federal income tax? Qualified retirement advice services Qualified moving expense reimbursements Personal use of a company vehicle Working condition fringes

Personal use of a company vehicle Under IRS rules, the personal use of a company vehicle is subject to income, social security, and Medicare taxes. Under IRC Sec. 132, qualified moving expenses, working condition fringe benefits, and qualified retirement advice services are nontaxable benefits.

Which of the following types of compensation is taxable? Employer reimbursement for professional organization fees Cost of a job-related seminar Subscription to a job-related newsletter Personal use of company vehicle

Personal use of company vehicle. RATIONALE IRC Sec. 132 defines the following nontaxable fringe benefits: no-additional-cost services, qualified employee discounts, de minimis benefits, working condition fringe benefits, qualified transportation fringe benefits, qualified moving expenses, and qualified retirement planning services. Working condition fringe benefits include subscriptions to a job-related newsletter, cost of a job-related seminar, and the reimbursement of dues to a professional organization. The IRC requires all compensation for services be included in an employee's income except when specifically excluded by law. There are no exclusions for cash payments, such as back-pay awards, personal use of a company-vehicle, and awards in a company sales contest.

Qualified transportation benefits:

QUALIFIED TRANSPORTATION BENEFITS ASSIST EMPLOYEES' TRAVEL TO AND FROM WORK, SUCH AS TRANSPORTATION IN COMMUTER HIGHWAY VEHICLES, TRANSIT PASSES, PARKING, AND BICYCLE COMMUTING.

Withhold what taxes from GTL?

SOCIAL SECURITY AND MEDICARE TAXES ARE WITHHELD FROM GROUP-TERM LIFE INSURANCE.

What is fair market value?

THE AMOUNT AN INDIVIDUAL WOULD PAY FOR A PRODUCT OR SERVICE IN AN ARM'S LENGTH TRANSACTION.

Commuting valuation rate is:

THE COMMUTING VALUATION RATE FOR PERSONAL USE OF COMPANY VEHICLES IS $1.50 PER TRIP OR $3.00 PER DAY.

Is GTL excluded from income?

THE FIRST $50,000 OF GROUP TERM-LIFE INSURANCE COVERAGE IS EXCLUDED FROM INCOME.

Formula for taxable benefits:

THE FORMULA FOR TAXABLE BENEFITS IS THE FAIR MARKET VALUE LESS AMOUNTS EXCLUDED BY LAW LESS ANY AMOUNTS PAID FOR THE BENEFIT WITH AFTER-TAX DOLLARS.

What taxes are withheld from tips?

THE IRS HAS DEFINED THE PRIORITY FOR THE WITHHOLDING OF TAXES FROM TIPS AS SOCIAL SECURITY AND MEDICARE FROM TIPS FIRST, THEN INCOME TAX FROM TIPS.

For taxes, who is a tipped employee?

THE IRS REQUIRES EMPLOYEES WHO RECEIVE TIPS OF $20 OR MORE TO REPORT THE TIPS TO THE EMPLOYER.

Stock purchase plan taxation:

THE LESSER OF THE DIFFERENCE BETWEEN THE OPTION PRICE AND FMV ON PURCHASE DATE OR OPTION PRICE AND FMV ON SALE DATE IS TAXABLE FOR FEDERAL INCOME TAX.

Monthly transportation benefit: .

THE MAXIMUM EXCLUSION FROM INCOME FOR A QUALIFIED TRANSPORTATION FRINGE BENEFIT IS $255 PER MONTH

Moving expense distance test is:

THE NEW WORKPLACE MUST BE AT LEAST 50 MILES FARTHER FROM THE OLD RESIDENCE THAN THE OLD WORKPLACE WAS FROM THE OLD RESIDENCE.

Personal company vehicle valuation:

THE VALUATION METHODS FOR THE PERSONAL USE OF COMPANY VEHICLES INCLUDE: GENERAL VALUATION METHOD AND THREE SPECIAL VALUATION METHODS (COMMUTING, ANNUAL LEASE, AND VEHICLE CENTS-PER-MILE.)

Cents-per-mile valuation rate is:

THE VEHICLE CENTS-PER-MILE VALUATION RATE FOR PERSONAL USE OF COMPANY VEHICLES IS $0.535 PER MILE.

An employee drove a company car 6,000 miles for business, 5,000 miles for commuting, and 4,000 miles for other personal use. The car is valued at $25,000.00. What are the tax implications of the employee's use of the car? The employer is required to report the value of the personal use of the vehicle quarterly. The employer must withhold federal income tax on the personal use of the vehicle. The employer cannot use the commuting value method to calculate the value of the personal use of the vehicle. To qualify for the cents-per-mile method, the employee must drive the vehicle at least 12,000 miles annually.

The employer cannot use the commuting value method to calculate the value of the personal use of the vehicle. Under IRS rules, the value of the personal use of a company vehicle is subject to social security and Medicare tax withholding. It is the employer's option whether to withhold income tax. When using the cents-per-mile valuation method, the value of the vehicle cannot exceed the luxury vehicle value, ($15,900.00 in 2017). It does not matter if the employee drives more personal than business miles in the company vehicle when determining the taxation of the personal use of the vehicle. The IRS requires employers to include the value of the personal use of a company vehicle at least annually.

An employee drove a company car 6,000 miles for business, 5,000 miles for commuting, and 4,000 miles for other personal use. The car is valued at $25,000.00. What are the tax implications of the employee's use of the car? The employer must withhold federal income tax on the personal use of the vehicle. The employer must withhold social security and Medicare taxes on the value of the personal use of the vehicle. As the employee drove more personal than business miles, the car cannot be considered a company vehicle. Using the cents-per-mile method, the personal use of the vehicle is valued at $1,500.00.

The employer must withhold federal income tax on the personal use of the vehicle. Under IRS rules, the value of the personal use of a company vehicle is subject to social security and Medicare tax withholding. It is the employer's option whether to withhold income tax. When using the cents-per-mile valuation method the value of the vehicle cannot exceed the luxury vehicle value ($15,900.00 in 2017). It does not matter if the employee drives more personal than business miles in the company-vehicles when determining the taxation of the personal use of the vehicle.

A qualified transportation fringe benefit allows employers to provide employees which of the following benefits on a tax-free basis? Cash advances of $100.00 for subway passes that are not substantiated Parking in a public lot that costs $305.00 per month Reimbursed transit pass without substantiation of the cost of the transit pass Transit passes for public buses not to exceed $255.00 per month

Transit passes for public buses not to exceed $255.00 per month. IRS rules allow employers to provide the qualified transportation fringe benefits - transit passes, commuting in a commuter highway vehicle, and parking. When meeting certain requirements, qualified transportation fringe benefits up to $255.00 per month are not taxable.

What are nontaxable awards?

UNDER CERTAIN CONDITIONS, LENGTH OF SERVICE AND SAFETY AWARDS ARE NOT TAXABLE.

What are allocated tips?

WHEN ALL EMPLOYEES REPORTED TIPS ARE NOT EQUAL TO OR GREATER THAN 8% OF SALES SUBJECT TO TIPS, THE EMPLOYER IS REQUIRED TO ALLOCATE TIPS. THE ALLOCATED TIPS WILL BRING THE REPORTED TIPS TO 8%.

Qualified transportation fringe benefits are subject to which taxes? a. No federal taxes b. Federal income tax only c. Social security and Medicare taxes only vd. Federal income, social security, and Medicare taxes

a. No federal taxes Under IRS rules, qualified transportation fringe benefits provided by an employer are not taxable if less than $255.00 per month. However, amounts in excess of $255.00 per month are subject to income, social security and Medicare tax withholding.

Employers may provide qualified transportation fringe benefits for: monthly commuter passes valued at $325.00. employer-provided cash advances for subway passes. reimbursed transit passes without substantiation of the cost of the transit passes. parking not to exceed $255.00 per month

parking not to exceed $255.00 per month Under IRS qualified transportation fringe benefit rules, transit passes, transportation in a commuter highway vehicle, and parking in excess of $255.00 per month are taxable. In addition, the IRS requires advances to be substantiated by the employee for qualified transportation fringe benefits and does not allow qualified transportation fringe benefits in a Sec. 125 Cafeteria Plan.

All of the following types of compensation are taxable EXCEPT: prize in company-sponsored sales contest. personal use of company vehicle. backpay awards. qualified employee discounts.

qualified employee discounts. IRC Sec. 132 defines the following nontaxable fringe benefits: no-additional-cost services, qualified employee discounts, de minimis benefits, working condition fringe benefits, qualified transportation fringe benefits, qualified moving expenses, and qualified retirement planning services. The IRC requires all compensation for services be included in an employee's income except when specifically excluded by law. There are no exclusions for cash payments, such as back-pay awards, personal use of a company-vehicle, and awards in a company sales contest.