The IRS updated Publication 15-B: Employer’s Tax Guide to Fringe Benefits. This publication contains important information for employers on the employment tax treatment of fringe benefits.
A fringe benefit is a type of non-wage pay for the performance of services. For example, an employer that allows an employee to use a business car to commute to and from work provides a fringe benefit. A fringe benefit is taxable and must be included in the recipient’s pay unless there is a specific legal exception. The amount an employer includes in pay is the amount by which the value of the fringe benefit is more than the sum of (a) any amount the law excludes from pay and (b) any amount the recipient is paid for the benefit.
If the recipient of a fringe benefit is an employee, the benefit is subject to employment taxes and must be reported on the individual’s Form W-2.
Publication 15-B identifies many types of fringe benefits, explains the exclusion rules, identifies the valuation rules, and provides the rules for withholding, depositing and reporting benefits.
The Publication is updated annually for tax changes. A copy of Publication 15-B may be accessed by clicking here.