If an employee receives anything that looks or smells like money from the employer, it’s probably taxable income. Think about everything from gift cards to small financial incentives to the personal use of a company car – unless an income item is specifically excluded by the IRS, the value should be included on an employee’s Form W-2.
Here’s a partial list of those excluded categories:
- Accident and health benefits
- Achievement awards up to $1,600 for qualified awards and $400 for nonqualified awards
- Adoption assistance
- Athletic facilities
- De minimis (minimal) benefits – these are items that are so small that accounting for them would be not administrative feasible. This can include occasional personal use of the office copying machine, occasional donuts or snacks, holiday or birthday gifts (other than cash) with a low market value, flowers or fruit provided to employees on account of illness, funeral, family crisis, or outstanding performance), occasional parties or picnics for employees, and occasional tickets for theatre or sporting events. Did you see the word “occasional”?
- Dependent care assistance
- Educational assistance up to $5,250
- Employee discounts
- Employee stock options
- Employer-provided cell phones
- Group term life insurance coverage up to $50,000
- Health savings accounts
- Meals
- Retirement plan services
- Transportation/commuting benefits
- Tuition reduction
This is not an all-inclusive list, and there are exceptions and special circumstances that apply. To read all the details, check out IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits.
Why are we telling you about all of this? You’ll need to be sure to include applicable amounts on employee Form W-2s, and now is the time to be sure you’ve counted everything you need to. If you have questions, please visit with your Mize payroll professional or relationship manager. We’re here to help!
