IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits

What is IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits?

The IRS Publication 15-B or the Employer's Tax Guide to Fringe Benefits is a document published by the Internal Revenue Service (IRS) that gives employers guidance on the most proficient method to account for increments to compensation given to employees while filing taxes. Fringe benefits allude to non-cash benefits gave to persons who perform services for a business, and can incorporate perks like the utilization of a company vehicle.

For employees, the company will report the value of any fringe benefit on the employee's W-2. For non-employees, companies ought to report the value of benefits utilizing Form 1099-MISC or Schedule K-1.

Understanding IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits

IRS publication 15-B, Employer's Tax Guide to Fringe Benefits is one of many aides the IRS publishes to assist companies with grasping their filing responsibilities. As the title proposes, Publication 15-B frames taxes with respect to fringe benefits. Fringe benefits offer extra compensation to employees above and beyond a settled upon wage or salary. Fringe benefits are just tax-exempt in the event that they are unequivocally excluded by tax law. Beneficiaries of taxable fringe benefits need to incorporate the fair market value of the benefit in their taxable income for the year.

IRS Publication 15-B gives an outline makes three key explanations about fringe benefits. One, a person performing a service for you doesn't need to be an employee in the traditional sense. Giving a vehicle to an independent contractor or member of the board of directors, for instance, would count as a fringe benefit. Two, you are viewed as the provider of the benefit even if a third party, like a client of your business, gives the fringe benefit to your employees. The model the aide allows is a day care service that gives your employees childminding in exchange for goods or services from your business. Three, the person who performs services for you (ordinarily your employee) is viewed as the beneficiary of the benefit for tax purposes even on the off chance that it is a family member getting/using the benefit.

Which Fringe Benefits are Taxable?

The IRS generally considers fringe benefits taxable, but there are exemptions. The IRS considers some cafeteria plan benefits, regularly those including medical care for employees, as pre-tax. Most fringe benefits that are income tax-exempt are additionally exempt from Social Security, Medicare and federal unemployment taxes, but not all. Reception assistance is exempt from income tax just, for instance.

Whether a fringe benefit is tax-exempt relies upon the type and, at times, the value of the benefit. By default, the IRS taxes all fringe benefits except if they are explicitly named as being tax-exempt. Accident and medical advantages, commuting benefits, dependent care assistance, instructive assistance, employee discounts, health savings accounts (HSA), and retirement planning services are a few instances of fringe benefits the IRS considers tax-exempt. A considerable lot of these have covers, similarly as with instructive assistance, for instance, which is simply exempt up to $5,250 every year. Other fringe benefits like amounts paid in excess of expenses for moving, utilization of a company vehicle, or coverage of vacation expenses are taxable regardless of the dollar amount.

How are Fringe Benefits Valued?

As a general rule, fringe benefits are valued at fair market value. This is the amount the employee would pay for a similar benefit in a third-party, arms-length transaction. Every pertinent situation, for example, geographic area and current market conditions, must be taken into account. The fair market value might be unique in relation to the genuine cost to the employer of giving the benefit, but that doesn't influence the valuation.

Features

• Fringe benefits are to be reported at fair market value, implying that the person getting the benefit reports its value in-accordance with what the person would need to pay a third party for it.
• Most fringe benefits are taxable except if they have been explicitly been made tax-exempt by law.
• IRS Publication 15-B or the Employer's Tax Guide to Fringe Benefits is an aide that employers use to figure out how to file the fringe benefits they give to their employees.
• Fringe benefits can likewise be accommodated non-employees like independent contractors, and these too must be reported for tax purposes.