Lecture Notes 19a PDF

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Summary

These lecture notes were written for the ACCU 452 Course taught by Professor Gerald Lege....

Description

Fringe Benefits •

No-Additional-Cost Services

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Qualified Employee Discounts

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Working Condition Fringe Benefits

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De Minimis Fringe Benefits

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Qualified Transportation Fringe Benefits

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Cafeteria Plans and Flexible Spending Accounts (FSAs)

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Employee and Employer Considerations for Nontaxable Fringe Benefits

Tax Planning with Fringe Benefits •

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Example •

Employer proposed to reimburse employee $200 a month for his parking costs. What amount of this reimbursement would be a nontaxable qualified transportation fringe benefit to employee?

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Answer: All $2,400. Employee can exclude up to $270 per month ($3,240 per year) as a qualified transportation fringe benefit.

IRS publication 15-B “Employer’s Tax Guide to Fringe Benefits” (available at www.irs.gov) provides tax guidance for employers providing fringe benefits.

Fringe Benefits Summary •

Both taxable and nontaxable can make up a significant portion of an employee’s compensation.

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Are taxable unless the tax laws specifically exclude them from gross income

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Taxable fringe benefits usually represent a luxury perk, while nontaxable fringe benefits are generally excluded for public policy reasons.

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At this point, you should be able to distinguish between taxable and nontaxable fringe benefits.

Tax Consequences of Home Ownership Tax Status of Dwelling Unit Dwelling unit includes:

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Home

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Condominium

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Mobile home

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Boat

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Other similar property

Dwelling unit may be used for: •

Solely personal use

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Mixture of personal use and rental use

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Solely rental use

Whether a dwelling unit is a residence or nonresidence for tax purposes depends on how the unit is used. Dwelling unit is residence if: •

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Personal-use days are more than the greater of: •

14 days or

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10 percent of the number of rental days during the year.

Otherwise, it is a nonresidence for tax purposes.

Personal-use days include: •

Days taxpayer (owner) or other owner stays in the home

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Days a relative of owner stays in the home even if relative pays full fair market value rent (unless home is relative’s principal residence)

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Days a nonowner stays in the home under vacation home exchange or swap

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Days a taxpayer rents out property for less than fair market value...