The IRS released a draft of the 2021 version of its guide to fringe benefits. This Publication 15-B provides information for employers on the employment tax treatment of fringe benefits.
A fringe benefit is a type of payment for the performance of services that are not actually “work” services. Fringe benefits are taxable and must be included in the recipients pay unless the law specifically excludes the expense.
Publication 15-B describes fringe benefits, discusses the exclusions that apply to certain fringe benefits and provides rules to determine the value of fringe benefits.
For 2021, the IRS identifies the following updates included in Publication 15-B:
- Cents per mile rule. The business mileage rate for 2021 is 56 cents per mile. This rate can be used to reimburse an employee for business use of a personal vehicle.
- Qualified parking exclusion and commuter transportation benefit. For 2021, the monthly exclusion for qualified parking is $270 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $270.
- Contribution limit on health FSA. For plan years beginning in 2021, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,750.
- New Form 1099-NEC. There is a new form 1099-NEC to report nonemployee compensation paid in 2020.
A copy of the updated draft Publication 15-B may be accessed by clicking here.
