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Amended Tax Return More:label_amended_20tax_20return More:bizfinance

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Amended Tax Return More:label_amended_20tax_20return More:bizfinance

Amended tax return more:label_amended_20tax_20return more:bizfinance Publication 535 - Additional Material Prev  Up  Next   Home   More Online Publications
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Deceptive pitches for investments often misrepresent or leave out facts in order to promote fantastic profits with little risk. No investment is risk-free and a high rate of return means greater risk. Before investing, get written information such as a prospectus or annual report. Beware if a salesperson:

  • Encourages you to borrow money or cash in retirement funds to invest;
  • Pressures you to invest immediately;
  • Promises quick profits;
  • Says that the disclosure documents required by Federal law are just a formality;
  • Tells you to write false information on your account form;
  • Sends material with typos or misspellings or not printed on letterhead;
  • Does not send your money promptly;
  • Offers to share inside information; or
  • Uses words like "guarantee","high return","limited offer", or "as safe as a CD".
  • Uses the phrase, "this investment is IRA-approved."
  • Claims that "off-shore investments are tax-free and confidential."

Investing in Gold

Many financial experts recommend buying gold as part of a balanced portfolio. Some suggest buying only a small amount because values can fluctuate; others recommend heavier investments.
There are a number of ways to invest in gold; common ones include bullion, certificates, and coins. Most people depend on an investment advisor or company to help them choose. Make sure the person or company you choose is licensed with your state securities administrator.
Also, be aware that the U.S. Mint's American Eagle Gold Bullion Coins are the only gold coins guaranteed by the U.S. government in terms of purity, weight, and content. They're available from precious metal or collectible coin dealers, certain banks, and brokerage houses. If you're considering investing in gold, do your homework first. Check with the U.S. Mint.
The Federal Trade Commission is another useful source for information on protecting yourself against scam artists touting coins and precious metals as safe investments to hedge against bad economic times.

The Amended Tax Return More:label_amended_20tax_20return More:bizfinance

Amended tax return more:label_amended_20tax_20return more:bizfinance Publication 15-B - Main Content Table of Contents 1. Amended tax return more:label_amended_20tax_20return more:bizfinance Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. Amended tax return more:label_amended_20tax_20return more:bizfinance Fringe Benefit Exclusion RulesAccident and Health Benefits Achievement Awards Adoption Assistance Athletic Facilities De Minimis (Minimal) Benefits Dependent Care Assistance Educational Assistance Employee Discounts Employee Stock Options Employer-Provided Cell Phones Group-Term Life Insurance Coverage Health Savings Accounts Lodging on Your Business Premises Meals Moving Expense Reimbursements No-Additional-Cost Services Retirement Planning Services Transportation (Commuting) Benefits Tuition Reduction Working Condition Benefits 3. Amended tax return more:label_amended_20tax_20return more:bizfinance Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. Amended tax return more:label_amended_20tax_20return more:bizfinance Rules for Withholding, Depositing, and ReportingTransfer of property. Amended tax return more:label_amended_20tax_20return more:bizfinance Amount of deposit. Amended tax return more:label_amended_20tax_20return more:bizfinance Limitation. Amended tax return more:label_amended_20tax_20return more:bizfinance Conformity rules. Amended tax return more:label_amended_20tax_20return more:bizfinance Election not to withhold income tax. Amended tax return more:label_amended_20tax_20return more:bizfinance How To Get Tax Help 1. Amended tax return more:label_amended_20tax_20return more:bizfinance Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. Amended tax return more:label_amended_20tax_20return more:bizfinance For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. Amended tax return more:label_amended_20tax_20return more:bizfinance Performance of services. Amended tax return more:label_amended_20tax_20return more:bizfinance   A person who performs services for you does not have to be your employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A person may perform services for you as an independent contractor, partner, or director. Amended tax return more:label_amended_20tax_20return more:bizfinance Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services. Amended tax return more:label_amended_20tax_20return more:bizfinance Provider of benefit. Amended tax return more:label_amended_20tax_20return more:bizfinance   You are the provider of a fringe benefit if it is provided for services performed for you. Amended tax return more:label_amended_20tax_20return more:bizfinance You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. Amended tax return more:label_amended_20tax_20return more:bizfinance For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care. Amended tax return more:label_amended_20tax_20return more:bizfinance Recipient of benefit. Amended tax return more:label_amended_20tax_20return more:bizfinance   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. Amended tax return more:label_amended_20tax_20return more:bizfinance That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. Amended tax return more:label_amended_20tax_20return more:bizfinance For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. Amended tax return more:label_amended_20tax_20return more:bizfinance Are Fringe Benefits Taxable? Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. Amended tax return more:label_amended_20tax_20return more:bizfinance Section 2 discusses the exclusions that apply to certain fringe benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Any benefit not excluded under the rules discussed in section 2 is taxable. Amended tax return more:label_amended_20tax_20return more:bizfinance Including taxable benefits in pay. Amended tax return more:label_amended_20tax_20return more:bizfinance   You must include in a recipient's pay the amount by which the value of a fringe benefit is more than the sum of the following amounts. Amended tax return more:label_amended_20tax_20return more:bizfinance Any amount the law excludes from pay. Amended tax return more:label_amended_20tax_20return more:bizfinance Any amount the recipient paid for the benefit. Amended tax return more:label_amended_20tax_20return more:bizfinance The rules used to determine the value of a fringe benefit are discussed in section 3. Amended tax return more:label_amended_20tax_20return more:bizfinance   If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. Amended tax return more:label_amended_20tax_20return more:bizfinance However, you can use special rules to withhold, deposit, and report the employment taxes. Amended tax return more:label_amended_20tax_20return more:bizfinance These rules are discussed in section 4. Amended tax return more:label_amended_20tax_20return more:bizfinance   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. Amended tax return more:label_amended_20tax_20return more:bizfinance However, you may have to report the benefit on one of the following information returns. Amended tax return more:label_amended_20tax_20return more:bizfinance If the recipient receives the benefit as: Use: An independent contractor Form 1099-MISC, Miscellaneous Income A partner Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Amended tax return more:label_amended_20tax_20return more:bizfinance For more information, see the instructions for the forms listed above. Amended tax return more:label_amended_20tax_20return more:bizfinance Cafeteria Plans A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. Amended tax return more:label_amended_20tax_20return more:bizfinance If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. Amended tax return more:label_amended_20tax_20return more:bizfinance Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. Amended tax return more:label_amended_20tax_20return more:bizfinance However, a cafeteria plan can include a qualified 401(k) plan as a benefit. Amended tax return more:label_amended_20tax_20return more:bizfinance Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. Amended tax return more:label_amended_20tax_20return more:bizfinance Qualified benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance   A cafeteria plan can include the following benefits discussed in section 2. Amended tax return more:label_amended_20tax_20return more:bizfinance Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). Amended tax return more:label_amended_20tax_20return more:bizfinance Adoption assistance. Amended tax return more:label_amended_20tax_20return more:bizfinance Dependent care assistance. Amended tax return more:label_amended_20tax_20return more:bizfinance Group-term life insurance coverage (including costs that cannot be excluded from wages). Amended tax return more:label_amended_20tax_20return more:bizfinance Health savings accounts (HSAs). Amended tax return more:label_amended_20tax_20return more:bizfinance Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. Amended tax return more:label_amended_20tax_20return more:bizfinance Benefits not allowed. Amended tax return more:label_amended_20tax_20return more:bizfinance   A cafeteria plan cannot include the following benefits discussed in section 2. Amended tax return more:label_amended_20tax_20return more:bizfinance Archer MSAs. Amended tax return more:label_amended_20tax_20return more:bizfinance See Accident and Health Benefits in section 2. Amended tax return more:label_amended_20tax_20return more:bizfinance Athletic facilities. Amended tax return more:label_amended_20tax_20return more:bizfinance De minimis (minimal) benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Educational assistance. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee discounts. Amended tax return more:label_amended_20tax_20return more:bizfinance Employer-provided cell phones. Amended tax return more:label_amended_20tax_20return more:bizfinance Lodging on your business premises. Amended tax return more:label_amended_20tax_20return more:bizfinance Meals. Amended tax return more:label_amended_20tax_20return more:bizfinance Moving expense reimbursements. Amended tax return more:label_amended_20tax_20return more:bizfinance No-additional-cost services. Amended tax return more:label_amended_20tax_20return more:bizfinance Transportation (commuting) benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Tuition reduction. Amended tax return more:label_amended_20tax_20return more:bizfinance Working condition benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). Amended tax return more:label_amended_20tax_20return more:bizfinance $2,500 limit on a health flexible spending arrangement (FSA). Amended tax return more:label_amended_20tax_20return more:bizfinance   For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. Amended tax return more:label_amended_20tax_20return more:bizfinance For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. Amended tax return more:label_amended_20tax_20return more:bizfinance   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). Amended tax return more:label_amended_20tax_20return more:bizfinance While cafeteria plans generally must be amended on a prospective basis, an amendment that is adopted on or before December 31, 2014, may be made effective retroactively, provided that in operation the cafeteria plan meets the limit for plan years beginning after December 31, 2012. Amended tax return more:label_amended_20tax_20return more:bizfinance A cafeteria plan that does not limit health FSA contributions to the dollar limit is not a cafeteria plan and all benefits offered under the plan are includible in the employee's gross income. Amended tax return more:label_amended_20tax_20return more:bizfinance   For more information, see Notice 2012-40, 2012-26 I. Amended tax return more:label_amended_20tax_20return more:bizfinance R. Amended tax return more:label_amended_20tax_20return more:bizfinance B. Amended tax return more:label_amended_20tax_20return more:bizfinance 1046, available at www. Amended tax return more:label_amended_20tax_20return more:bizfinance irs. Amended tax return more:label_amended_20tax_20return more:bizfinance gov/irb/2012-26_IRB/ar09. Amended tax return more:label_amended_20tax_20return more:bizfinance html. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For these plans, treat the following individuals as employees. Amended tax return more:label_amended_20tax_20return more:bizfinance A current common-law employee. Amended tax return more:label_amended_20tax_20return more:bizfinance See section 2 in Publication 15 (Circular E) for more information. Amended tax return more:label_amended_20tax_20return more:bizfinance A full-time life insurance agent who is a current statutory employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception for S corporation shareholders. Amended tax return more:label_amended_20tax_20return more:bizfinance   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Amended tax return more:label_amended_20tax_20return more:bizfinance A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Amended tax return more:label_amended_20tax_20return more:bizfinance Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Amended tax return more:label_amended_20tax_20return more:bizfinance Plans that favor highly compensated employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. Amended tax return more:label_amended_20tax_20return more:bizfinance A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   A highly compensated employee for this purpose is any of the following employees. Amended tax return more:label_amended_20tax_20return more:bizfinance An officer. Amended tax return more:label_amended_20tax_20return more:bizfinance A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. Amended tax return more:label_amended_20tax_20return more:bizfinance An employee who is highly compensated based on the facts and circumstances. Amended tax return more:label_amended_20tax_20return more:bizfinance A spouse or dependent of a person described in (1), (2), or (3). Amended tax return more:label_amended_20tax_20return more:bizfinance Plans that favor key employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. Amended tax return more:label_amended_20tax_20return more:bizfinance A plan favors key employees if more than 25% of the total of the nontaxable benefits you provide for all employees under the plan go to key employees. Amended tax return more:label_amended_20tax_20return more:bizfinance However, a plan you maintain under a collective bargaining agreement does not favor key employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   A key employee during 2014 is generally an employee who is either of the following. Amended tax return more:label_amended_20tax_20return more:bizfinance An officer having annual pay of more than $170,000. Amended tax return more:label_amended_20tax_20return more:bizfinance An employee who for 2014 is either of the following. Amended tax return more:label_amended_20tax_20return more:bizfinance A 5% owner of your business. Amended tax return more:label_amended_20tax_20return more:bizfinance A 1% owner of your business whose annual pay was more than $150,000. Amended tax return more:label_amended_20tax_20return more:bizfinance Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. Amended tax return more:label_amended_20tax_20return more:bizfinance Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. Amended tax return more:label_amended_20tax_20return more:bizfinance Eligible employer. Amended tax return more:label_amended_20tax_20return more:bizfinance   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. Amended tax return more:label_amended_20tax_20return more:bizfinance If your business was not in existence throughout the preceding year, you are eligible if you reasonably expect to employ an average of 100 or fewer employees in the current year. Amended tax return more:label_amended_20tax_20return more:bizfinance If you establish a simple cafeteria plan in a year that you employ an average of 100 or fewer employees, you are considered an eligible employer for any subsequent year as long as you do not employ an average of 200 or more employees in a subsequent year. Amended tax return more:label_amended_20tax_20return more:bizfinance Eligibility and participation requirements. Amended tax return more:label_amended_20tax_20return more:bizfinance   These requirements are met if all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate and each employee eligible to participate in the plan may elect any benefit available under the plan. Amended tax return more:label_amended_20tax_20return more:bizfinance You may elect to exclude from the plan employees who: Are under age 21 before the close of the plan year, Have less than 1 year of service with you as of any day during the plan year, Are covered under a collective bargaining agreement, or Are nonresident aliens working outside the United States whose income did not come from a U. Amended tax return more:label_amended_20tax_20return more:bizfinance S. Amended tax return more:label_amended_20tax_20return more:bizfinance source. Amended tax return more:label_amended_20tax_20return more:bizfinance Contribution requirements. Amended tax return more:label_amended_20tax_20return more:bizfinance   You must make a contribution to provide qualified benefits on behalf of each qualified employee in an amount equal to: A uniform percentage (not less than 2%) of the employee’s compensation for the plan year, or An amount which is at least 6% of the employee’s compensation for the plan year or twice the amount of the salary reduction contributions of each qualified employee, whichever is less. Amended tax return more:label_amended_20tax_20return more:bizfinance If the contribution requirements are met using option (2), the rate of contribution to any salary reduction contribution of a highly compensated or key employee can not be greater than the rate of contribution to any other employee. Amended tax return more:label_amended_20tax_20return more:bizfinance More information. Amended tax return more:label_amended_20tax_20return more:bizfinance   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. Amended tax return more:label_amended_20tax_20return more:bizfinance 2. Amended tax return more:label_amended_20tax_20return more:bizfinance Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance These rules exclude all or part of the value of certain benefits from the recipient's pay. Amended tax return more:label_amended_20tax_20return more:bizfinance The excluded benefits are not subject to federal income tax withholding. Amended tax return more:label_amended_20tax_20return more:bizfinance Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2. Amended tax return more:label_amended_20tax_20return more:bizfinance This section discusses the exclusion rules for the following fringe benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Accident and health benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Achievement awards. Amended tax return more:label_amended_20tax_20return more:bizfinance Adoption assistance. Amended tax return more:label_amended_20tax_20return more:bizfinance Athletic facilities. Amended tax return more:label_amended_20tax_20return more:bizfinance De minimis (minimal) benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Dependent care assistance. Amended tax return more:label_amended_20tax_20return more:bizfinance Educational assistance. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee discounts. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee stock options. Amended tax return more:label_amended_20tax_20return more:bizfinance Employer-provided cell phones. Amended tax return more:label_amended_20tax_20return more:bizfinance Group-term life insurance coverage. Amended tax return more:label_amended_20tax_20return more:bizfinance Health savings accounts (HSAs). Amended tax return more:label_amended_20tax_20return more:bizfinance Lodging on your business premises. Amended tax return more:label_amended_20tax_20return more:bizfinance Meals. Amended tax return more:label_amended_20tax_20return more:bizfinance Moving expense reimbursements. Amended tax return more:label_amended_20tax_20return more:bizfinance No-additional-cost services. Amended tax return more:label_amended_20tax_20return more:bizfinance Retirement planning services. Amended tax return more:label_amended_20tax_20return more:bizfinance Transportation (commuting) benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Tuition reduction. Amended tax return more:label_amended_20tax_20return more:bizfinance Working condition benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance See Table 2-1, later, for an overview of the employment tax treatment of these benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Table 2-1. Amended tax return more:label_amended_20tax_20return more:bizfinance Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. Amended tax return more:label_amended_20tax_20return more:bizfinance ) Treatment Under Employment Taxes Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal Unemployment (FUTA) Accident and health benefits Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement. Amended tax return more:label_amended_20tax_20return more:bizfinance Exempt, except for certain payments to S corporation employees who are 2% shareholders. Amended tax return more:label_amended_20tax_20return more:bizfinance Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). Amended tax return more:label_amended_20tax_20return more:bizfinance Adoption assistance Exempt1,3 Taxable Taxable Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children and the facility is operated by the employer on premises owned or leased by the employer. Amended tax return more:label_amended_20tax_20return more:bizfinance De minimis (minimal) benefits Exempt Exempt Exempt Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return). Amended tax return more:label_amended_20tax_20return more:bizfinance Educational assistance Exempt up to $5,250 of benefits each year. Amended tax return more:label_amended_20tax_20return more:bizfinance (See Educational Assistance , later in this section. Amended tax return more:label_amended_20tax_20return more:bizfinance ) Employee discounts Exempt3 up to certain limits. Amended tax return more:label_amended_20tax_20return more:bizfinance (See Employee Discounts , later in this section. Amended tax return more:label_amended_20tax_20return more:bizfinance ) Employee stock options See Employee Stock Options , later in this section. Amended tax return more:label_amended_20tax_20return more:bizfinance Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. Amended tax return more:label_amended_20tax_20return more:bizfinance Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. Amended tax return more:label_amended_20tax_20return more:bizfinance (Special rules apply to former employees. Amended tax return more:label_amended_20tax_20return more:bizfinance ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. Amended tax return more:label_amended_20tax_20return more:bizfinance (See Health Savings Accounts , later in this section. Amended tax return more:label_amended_20tax_20return more:bizfinance ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. Amended tax return more:label_amended_20tax_20return more:bizfinance Meals Exempt if furnished on your business premises for your convenience. Amended tax return more:label_amended_20tax_20return more:bizfinance Exempt if de minimis. Amended tax return more:label_amended_20tax_20return more:bizfinance Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. Amended tax return more:label_amended_20tax_20return more:bizfinance No-additional-cost services Exempt3 Exempt3 Exempt3 Retirement planning services Exempt5 Exempt5 Exempt5 Transportation (commuting) benefits Exempt1 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($130), qualified parking ($250), or qualified bicycle commuting reimbursement6 ($20). Amended tax return more:label_amended_20tax_20return more:bizfinance (See Transportation (Commuting) Benefits , later in this section. Amended tax return more:label_amended_20tax_20return more:bizfinance ) Exempt if de minimis. Amended tax return more:label_amended_20tax_20return more:bizfinance Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). Amended tax return more:label_amended_20tax_20return more:bizfinance Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. Amended tax return more:label_amended_20tax_20return more:bizfinance 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. Amended tax return more:label_amended_20tax_20return more:bizfinance 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. Amended tax return more:label_amended_20tax_20return more:bizfinance 4 Exemption does not apply to certain key employees under a plan that favors those employees. Amended tax return more:label_amended_20tax_20return more:bizfinance 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. Amended tax return more:label_amended_20tax_20return more:bizfinance 6 If the employee receives a qualified bicycle commuting reimbursement in a qualified bicycle commuting month, the employee cannot receive commuter highway vehicle, transit pass, or qualified parking benefits in that same month. Amended tax return more:label_amended_20tax_20return more:bizfinance 7 You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Amended tax return more:label_amended_20tax_20return more:bizfinance Also, show it in box 12 with code “C. Amended tax return more:label_amended_20tax_20return more:bizfinance ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Amended tax return more:label_amended_20tax_20return more:bizfinance Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. Amended tax return more:label_amended_20tax_20return more:bizfinance Contributions to the cost of accident or health insurance including qualified long-term care insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). Amended tax return more:label_amended_20tax_20return more:bizfinance This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following. Amended tax return more:label_amended_20tax_20return more:bizfinance Payments or reimbursements of medical expenses. Amended tax return more:label_amended_20tax_20return more:bizfinance Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). Amended tax return more:label_amended_20tax_20return more:bizfinance The payments must be figured without regard to any period of absence from work. Amended tax return more:label_amended_20tax_20return more:bizfinance Accident or health plan. Amended tax return more:label_amended_20tax_20return more:bizfinance   This is an arrangement that provides benefits for your employees, their spouses, their dependents, and their children (under age 27) in the event of personal injury or sickness. Amended tax return more:label_amended_20tax_20return more:bizfinance The plan may be insured or noninsured and does not need to be in writing. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, treat the following individuals as employees. Amended tax return more:label_amended_20tax_20return more:bizfinance A current common-law employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A full-time life insurance agent who is a current statutory employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A retired employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A former employee you maintain coverage for based on the employment relationship. Amended tax return more:label_amended_20tax_20return more:bizfinance A widow or widower of an individual who died while an employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A widow or widower of a retired employee. Amended tax return more:label_amended_20tax_20return more:bizfinance For the exclusion of contributions to an accident or health plan, a leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Amended tax return more:label_amended_20tax_20return more:bizfinance Special rule for certain government plans. Amended tax return more:label_amended_20tax_20return more:bizfinance   For certain government accident and health plans, payments to a deceased plan participant's beneficiary may qualify for the exclusion from gross income if the other requirements for exclusion are met. Amended tax return more:label_amended_20tax_20return more:bizfinance See section 105(j) for details. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception for S corporation shareholders. Amended tax return more:label_amended_20tax_20return more:bizfinance   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Amended tax return more:label_amended_20tax_20return more:bizfinance A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Amended tax return more:label_amended_20tax_20return more:bizfinance Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Amended tax return more:label_amended_20tax_20return more:bizfinance Exclusion from wages. Amended tax return more:label_amended_20tax_20return more:bizfinance   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception for certain long-term care benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance   You cannot exclude contributions to the cost of long-term care insurance from an employee's wages subject to federal income tax withholding if the coverage is provided through a flexible spending or similar arrangement. Amended tax return more:label_amended_20tax_20return more:bizfinance This is a benefit program that reimburses specified expenses up to a maximum amount that is reasonably available to the employee and is less than five times the total cost of the insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Amended tax return more:label_amended_20tax_20return more:bizfinance S corporation shareholders. Amended tax return more:label_amended_20tax_20return more:bizfinance   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the value of accident or health benefits you provide to the employee in the employee's wages subject to federal income tax withholding. Amended tax return more:label_amended_20tax_20return more:bizfinance However, you can exclude the value of these benefits (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception for highly compensated employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   If your plan is a self-insured medical reimbursement plan that favors highly compensated employees, you must include all or part of the amounts you pay to these employees in their wages subject to federal income tax withholding. Amended tax return more:label_amended_20tax_20return more:bizfinance However, you can exclude these amounts (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. Amended tax return more:label_amended_20tax_20return more:bizfinance   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. Amended tax return more:label_amended_20tax_20return more:bizfinance   A highly compensated employee for this exception is any of the following individuals. Amended tax return more:label_amended_20tax_20return more:bizfinance One of the five highest paid officers. Amended tax return more:label_amended_20tax_20return more:bizfinance An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. Amended tax return more:label_amended_20tax_20return more:bizfinance An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). Amended tax return more:label_amended_20tax_20return more:bizfinance   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. Amended tax return more:label_amended_20tax_20return more:bizfinance COBRA premiums. Amended tax return more:label_amended_20tax_20return more:bizfinance   The exclusion for accident and health benefits applies to amounts you pay to maintain medical coverage for a current or former employee under the Combined Omnibus Budget Reconciliation Act of 1986 (COBRA). Amended tax return more:label_amended_20tax_20return more:bizfinance The exclusion applies regardless of the length of employment, whether you directly pay the premiums or reimburse the former employee for premiums paid, and whether the employee's separation is permanent or temporary. Amended tax return more:label_amended_20tax_20return more:bizfinance Achievement Awards This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. Amended tax return more:label_amended_20tax_20return more:bizfinance The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. Amended tax return more:label_amended_20tax_20return more:bizfinance The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, treat the following individuals as employees. Amended tax return more:label_amended_20tax_20return more:bizfinance A current employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception for S corporation shareholders. Amended tax return more:label_amended_20tax_20return more:bizfinance   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Amended tax return more:label_amended_20tax_20return more:bizfinance A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Amended tax return more:label_amended_20tax_20return more:bizfinance Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Amended tax return more:label_amended_20tax_20return more:bizfinance Exclusion from wages. Amended tax return more:label_amended_20tax_20return more:bizfinance   You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. Amended tax return more:label_amended_20tax_20return more:bizfinance The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). Amended tax return more:label_amended_20tax_20return more:bizfinance See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. Amended tax return more:label_amended_20tax_20return more:bizfinance    To determine for 2014 whether an achievement award is a “qualified plan award” under the deduction rules described in Publication 535, treat any employee who received more than $115,000 in pay for 2013 as a highly compensated employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   If the cost of awards given to an employee is more than your allowable deduction, include in the employee's wages the larger of the following amounts. Amended tax return more:label_amended_20tax_20return more:bizfinance The part of the cost that is more than your allowable deduction (up to the value of the awards). Amended tax return more:label_amended_20tax_20return more:bizfinance The amount by which the value of the awards exceeds your allowable deduction. Amended tax return more:label_amended_20tax_20return more:bizfinance Exclude the remaining value of the awards from the employee's wages. Amended tax return more:label_amended_20tax_20return more:bizfinance Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. Amended tax return more:label_amended_20tax_20return more:bizfinance It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. Amended tax return more:label_amended_20tax_20return more:bizfinance To determine whether your plan meets this test, do not consider employees excluded from your plan who are covered by a collective bargaining agreement, if there is evidence that adoption assistance was a subject of good-faith bargaining. Amended tax return more:label_amended_20tax_20return more:bizfinance It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). Amended tax return more:label_amended_20tax_20return more:bizfinance A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. Amended tax return more:label_amended_20tax_20return more:bizfinance You give reasonable notice of the plan to eligible employees. Amended tax return more:label_amended_20tax_20return more:bizfinance Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. Amended tax return more:label_amended_20tax_20return more:bizfinance For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee was a 5% owner at any time during the year or the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee received more than $115,000 in pay for the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance You must exclude all payments or reimbursements you make under an adoption assistance program for an employee's qualified adoption expenses from the employee's wages subject to federal income tax withholding. Amended tax return more:label_amended_20tax_20return more:bizfinance However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Amended tax return more:label_amended_20tax_20return more:bizfinance For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. Amended tax return more:label_amended_20tax_20return more:bizfinance You must report all qualifying adoption expenses you paid or reimbursed under your adoption assistance program for each employee for the year in box 12 of the employee's Form W-2. Amended tax return more:label_amended_20tax_20return more:bizfinance Use code “T” to identify this amount. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception for S corporation shareholders. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Amended tax return more:label_amended_20tax_20return more:bizfinance A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Amended tax return more:label_amended_20tax_20return more:bizfinance Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, including using the benefit as a reduction in distributions to the 2% shareholder. Amended tax return more:label_amended_20tax_20return more:bizfinance Athletic Facilities You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. Amended tax return more:label_amended_20tax_20return more:bizfinance For this purpose, an employee's dependent child is a child or stepchild who is the employee's dependent or who, if both parents are deceased, has not attained the age of 25. Amended tax return more:label_amended_20tax_20return more:bizfinance On-premises facility. Amended tax return more:label_amended_20tax_20return more:bizfinance   The athletic facility must be located on premises you own or lease. Amended tax return more:label_amended_20tax_20return more:bizfinance It does not have to be located on your business premises. Amended tax return more:label_amended_20tax_20return more:bizfinance However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, treat the following individuals as employees. Amended tax return more:label_amended_20tax_20return more:bizfinance A current employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A former employee who retired or left on disability. Amended tax return more:label_amended_20tax_20return more:bizfinance A widow or widower of an individual who died while an employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A widow or widower of a former employee who retired or left on disability. Amended tax return more:label_amended_20tax_20return more:bizfinance A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Amended tax return more:label_amended_20tax_20return more:bizfinance A partner who performs services for a partnership. Amended tax return more:label_amended_20tax_20return more:bizfinance De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. Amended tax return more:label_amended_20tax_20return more:bizfinance A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. Amended tax return more:label_amended_20tax_20return more:bizfinance Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare. Amended tax return more:label_amended_20tax_20return more:bizfinance Examples of de minimis benefits include the following. Amended tax return more:label_amended_20tax_20return more:bizfinance Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. Amended tax return more:label_amended_20tax_20return more:bizfinance See Employer-Provided Cell Phones , later in this section, for details. Amended tax return more:label_amended_20tax_20return more:bizfinance Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes. Amended tax return more:label_amended_20tax_20return more:bizfinance Holiday gifts, other than cash, with a low fair market value. Amended tax return more:label_amended_20tax_20return more:bizfinance Group-term life insurance payable on the death of an employee's spouse or dependent if the face amount is not more than $2,000. Amended tax return more:label_amended_20tax_20return more:bizfinance Meals. Amended tax return more:label_amended_20tax_20return more:bizfinance See Meals , later in this section, for details. Amended tax return more:label_amended_20tax_20return more:bizfinance Occasional parties or picnics for employees and their guests. Amended tax return more:label_amended_20tax_20return more:bizfinance Occasional tickets for theater or sporting events. Amended tax return more:label_amended_20tax_20return more:bizfinance Transportation fare. Amended tax return more:label_amended_20tax_20return more:bizfinance See Transportation (Commuting) Benefits , later in this section, for details. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, treat any recipient of a de minimis benefit as an employee. Amended tax return more:label_amended_20tax_20return more:bizfinance Dependent Care Assistance This exclusion applies to household and dependent care services you directly or indirectly pay for or provide to an employee under a dependent care assistance program that covers only your employees. Amended tax return more:label_amended_20tax_20return more:bizfinance The services must be for a qualifying person's care and must be provided to allow the employee to work. Amended tax return more:label_amended_20tax_20return more:bizfinance These requirements are basically the same as the tests the employee would have to meet to claim the dependent care credit if the employee paid for the services. Amended tax return more:label_amended_20tax_20return more:bizfinance For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, treat the following individuals as employees. Amended tax return more:label_amended_20tax_20return more:bizfinance A current employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Amended tax return more:label_amended_20tax_20return more:bizfinance Yourself (if you are a sole proprietor). Amended tax return more:label_amended_20tax_20return more:bizfinance A partner who performs services for a partnership. Amended tax return more:label_amended_20tax_20return more:bizfinance Exclusion from wages. Amended tax return more:label_amended_20tax_20return more:bizfinance   You can exclude the value of benefits you provide to an employee under a dependent care assistance program from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income. Amended tax return more:label_amended_20tax_20return more:bizfinance   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. Amended tax return more:label_amended_20tax_20return more:bizfinance This limit is reduced to $2,500 for married employees filing separate returns. Amended tax return more:label_amended_20tax_20return more:bizfinance   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. Amended tax return more:label_amended_20tax_20return more:bizfinance Special rules apply to determine the earned income of a spouse who is either a student or not able to care for himself or herself. Amended tax return more:label_amended_20tax_20return more:bizfinance For more information on the earned income limit, see Publication 503. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception for highly compensated employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   You cannot exclude dependent care assistance from the wages of a highly compensated employee unless the benefits provided under the program do not favor highly compensated employees and the program meets the requirements described in section 129(d) of the Internal Revenue Code. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee was a 5% owner at any time during the year or the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee received more than $115,000 in pay for the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance Form W-2. Amended tax return more:label_amended_20tax_20return more:bizfinance   Report the value of all dependent care assistance you provide to an employee under a dependent care assistance program in box 10 of the employee's Form W-2. Amended tax return more:label_amended_20tax_20return more:bizfinance Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. Amended tax return more:label_amended_20tax_20return more:bizfinance Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. Amended tax return more:label_amended_20tax_20return more:bizfinance Example. Amended tax return more:label_amended_20tax_20return more:bizfinance   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. Amended tax return more:label_amended_20tax_20return more:bizfinance In addition, it provides occasional on-site dependent care to its employees at no cost. Amended tax return more:label_amended_20tax_20return more:bizfinance Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. Amended tax return more:label_amended_20tax_20return more:bizfinance In addition, Emily used the on-site dependent care several times. Amended tax return more:label_amended_20tax_20return more:bizfinance The fair market value of the on-site care was $700. Amended tax return more:label_amended_20tax_20return more:bizfinance Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). Amended tax return more:label_amended_20tax_20return more:bizfinance Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount. Amended tax return more:label_amended_20tax_20return more:bizfinance Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. Amended tax return more:label_amended_20tax_20return more:bizfinance The exclusion also applies to graduate level courses. Amended tax return more:label_amended_20tax_20return more:bizfinance Educational assistance means amounts you pay or incur for your employees' education expenses. Amended tax return more:label_amended_20tax_20return more:bizfinance These expenses generally include the cost of books, equipment, fees, supplies, and tuition. Amended tax return more:label_amended_20tax_20return more:bizfinance However, these expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education: Has a reasonable relationship to your business, or Is required as part of a degree program. Amended tax return more:label_amended_20tax_20return more:bizfinance Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. Amended tax return more:label_amended_20tax_20return more:bizfinance Nor do they include the cost of lodging, meals, or transportation. Amended tax return more:label_amended_20tax_20return more:bizfinance Educational assistance program. Amended tax return more:label_amended_20tax_20return more:bizfinance   An educational assistance program is a separate written plan that provides educational assistance only to your employees. Amended tax return more:label_amended_20tax_20return more:bizfinance The program qualifies only if all of the following tests are met. Amended tax return more:label_amended_20tax_20return more:bizfinance The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. Amended tax return more:label_amended_20tax_20return more:bizfinance To determine whether your program meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. Amended tax return more:label_amended_20tax_20return more:bizfinance The program does not provide more than 5% of its benefits during the year for shareholders or owners. Amended tax return more:label_amended_20tax_20return more:bizfinance A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. Amended tax return more:label_amended_20tax_20return more:bizfinance The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. Amended tax return more:label_amended_20tax_20return more:bizfinance You give reasonable notice of the program to eligible employees. Amended tax return more:label_amended_20tax_20return more:bizfinance Your program can cover former employees if their employment is the reason for the coverage. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee was a 5% owner at any time during the year or the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee received more than $115,000 in pay for the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, treat the following individuals as employees. Amended tax return more:label_amended_20tax_20return more:bizfinance A current employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A former employee who retired, left on disability, or was laid off. Amended tax return more:label_amended_20tax_20return more:bizfinance A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Amended tax return more:label_amended_20tax_20return more:bizfinance Yourself (if you are a sole proprietor). Amended tax return more:label_amended_20tax_20return more:bizfinance A partner who performs services for a partnership. Amended tax return more:label_amended_20tax_20return more:bizfinance Exclusion from wages. Amended tax return more:label_amended_20tax_20return more:bizfinance   You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. Amended tax return more:label_amended_20tax_20return more:bizfinance Assistance over $5,250. Amended tax return more:label_amended_20tax_20return more:bizfinance   If you do not have an educational assistance plan, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Working condition benefits may be excluded from wages. Amended tax return more:label_amended_20tax_20return more:bizfinance Property or a service provided is a working condition benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. Amended tax return more:label_amended_20tax_20return more:bizfinance See Working Condition Benefits , later, in this section. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. Amended tax return more:label_amended_20tax_20return more:bizfinance However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). Amended tax return more:label_amended_20tax_20return more:bizfinance Employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, treat the following individuals as employees. Amended tax return more:label_amended_20tax_20return more:bizfinance A current employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A former employee who retired or left on disability. Amended tax return more:label_amended_20tax_20return more:bizfinance A widow or widower of an individual who died while an employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A widow or widower of an employee who retired or left on disability. Amended tax return more:label_amended_20tax_20return more:bizfinance A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Amended tax return more:label_amended_20tax_20return more:bizfinance A partner who performs services for a partnership. Amended tax return more:label_amended_20tax_20return more:bizfinance Exclusion from wages. Amended tax return more:label_amended_20tax_20return more:bizfinance   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. Amended tax return more:label_amended_20tax_20return more:bizfinance For a discount on services, 20% of the price you charge nonemployee customers for the service. Amended tax return more:label_amended_20tax_20return more:bizfinance For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. Amended tax return more:label_amended_20tax_20return more:bizfinance   Determine your gross profit percentage in the line of business based on all property you offer to customers (including employee customers) and your experience during the tax year immediately before the tax year in which the discount is available. Amended tax return more:label_amended_20tax_20return more:bizfinance To figure your gross profit percentage, subtract the total cost of the property from the total sales price of the property and divide the result by the total sales price of the property. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception for highly compensated employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   You cannot exclude from the wages of a highly compensated employee any part of the value of a discount that is not available on the same terms to one of the following groups. Amended tax return more:label_amended_20tax_20return more:bizfinance All of your employees. Amended tax return more:label_amended_20tax_20return more:bizfinance A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee was a 5% owner at any time during the year or the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee received more than $115,000 in pay for the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. Amended tax return more:label_amended_20tax_20return more:bizfinance Wages for social security, Medicare, and federal unemployment (FUTA) taxes do not include remuneration resulting from the exercise, after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or from any disposition of stock acquired by exercising such an option. Amended tax return more:label_amended_20tax_20return more:bizfinance The IRS will not apply these taxes to an exercise before October 23, 2004, of an incentive stock option or an employee stock purchase plan option or to a disposition of stock acquired by such exercise. Amended tax return more:label_amended_20tax_20return more:bizfinance Additionally, federal income tax withholding is not required on the income resulting from a disqualifying disposition of stock acquired by the exercise after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or on income equal to the discount portion of stock acquired by the exercise, after October 22, 2004, of an employee stock purchase plan option resulting from any disposition of the stock. Amended tax return more:label_amended_20tax_20return more:bizfinance The IRS will not apply federal income tax withholding upon the disposition of stock acquired by the exercise, before October 23, 2004, of an incentive stock option or an employee stock purchase plan option. Amended tax return more:label_amended_20tax_20return more:bizfinance However, the employer must report as income in box 1 of Form W-2, (a) the discount portion of stock acquired by the exercise of an employee stock purchase plan option upon disposition of the stock, and (b) the spread (between the exercise price and the fair market value of the stock at the time of exercise) upon a disqualifying disposition of stock acquired by the exercise of an incentive stock option or an employee stock purchase plan option. Amended tax return more:label_amended_20tax_20return more:bizfinance An employer must report the excess of the fair market value of stock received upon exercise of a nonstatutory stock option over the amount paid for the stock option on Form W-2 in boxes 1, 3 (up to the social security wage base), 5, and in box 12 using the code “V. Amended tax return more:label_amended_20tax_20return more:bizfinance ” See Regulations section 1. Amended tax return more:label_amended_20tax_20return more:bizfinance 83-7. Amended tax return more:label_amended_20tax_20return more:bizfinance An employee who transfers his or her interest in nonstatutory stock options to the employee's former spouse incident to a divorce is not required to include an amount in gross income upon the transfer. Amended tax return more:label_amended_20tax_20return more:bizfinance The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. Amended tax return more:label_amended_20tax_20return more:bizfinance See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. Amended tax return more:label_amended_20tax_20return more:bizfinance You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. Amended tax return more:label_amended_20tax_20return more:bizfinance irs. Amended tax return more:label_amended_20tax_20return more:bizfinance gov/pub/irs-irbs/irb02-19. Amended tax return more:label_amended_20tax_20return more:bizfinance pdf. Amended tax return more:label_amended_20tax_20return more:bizfinance See Revenue Ruling 2004-60, 2004-24 I. Amended tax return more:label_amended_20tax_20return more:bizfinance R. Amended tax return more:label_amended_20tax_20return more:bizfinance B. Amended tax return more:label_amended_20tax_20return more:bizfinance 1051, available at www. Amended tax return more:label_amended_20tax_20return more:bizfinance irs. Amended tax return more:label_amended_20tax_20return more:bizfinance gov/irb/2004-24_IRB/ar13. Amended tax return more:label_amended_20tax_20return more:bizfinance html. Amended tax return more:label_amended_20tax_20return more:bizfinance For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. Amended tax return more:label_amended_20tax_20return more:bizfinance Employer-Provided Cell Phones The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. Amended tax return more:label_amended_20tax_20return more:bizfinance Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit. Amended tax return more:label_amended_20tax_20return more:bizfinance For the rules relating to these types of benefits, see De Minimis (Minimal) Benefits , earlier in this section, and Working Condition Benefits , later in this section. Amended tax return more:label_amended_20tax_20return more:bizfinance Noncompensatory business purposes. Amended tax return more:label_amended_20tax_20return more:bizfinance   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. Amended tax return more:label_amended_20tax_20return more:bizfinance Examples of substantial business reasons include the employer's: Need to contact the employee at all times for work-related emergencies, Requirement that the employee be available to speak with clients at times when the employee is away from the office, and Need to speak with clients located in other time zones at times outside the employee's normal workday. Amended tax return more:label_amended_20tax_20return more:bizfinance Cell phones provided to promote goodwill, boost morale, or attract prospective employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   You cannot exclude from an employee's wages the value of a cell phone provided to promote goodwill of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee. Amended tax return more:label_amended_20tax_20return more:bizfinance Additional information. Amended tax return more:label_amended_20tax_20return more:bizfinance   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. Amended tax return more:label_amended_20tax_20return more:bizfinance R. Amended tax return more:label_amended_20tax_20return more:bizfinance B. Amended tax return more:label_amended_20tax_20return more:bizfinance 407, available at  www. Amended tax return more:label_amended_20tax_20return more:bizfinance irs. Amended tax return more:label_amended_20tax_20return more:bizfinance gov/irb/2011-38_IRB/ar07. Amended tax return more:label_amended_20tax_20return more:bizfinance html. Amended tax return more:label_amended_20tax_20return more:bizfinance Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. Amended tax return more:label_amended_20tax_20return more:bizfinance It provides a general death benefit that is not included in income. Amended tax return more:label_amended_20tax_20return more:bizfinance You provide it to a group of employees. Amended tax return more:label_amended_20tax_20return more:bizfinance See The 10-employee rule , later. Amended tax return more:label_amended_20tax_20return more:bizfinance It provides an amount of insurance to each employee based on a formula that prevents individual selection. Amended tax return more:label_amended_20tax_20return more:bizfinance This formula must use factors such as the employee's age, years of service, pay, or position. Amended tax return more:label_amended_20tax_20return more:bizfinance You provide it under a policy you directly or indirectly carry. Amended tax return more:label_amended_20tax_20return more:bizfinance Even if you do not pay any of the policy's cost, you are considered to carry it if you arrange for payment of its cost by your employees and charge at least one employee less than, and at least one other employee more than, the cost of his or her insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. Amended tax return more:label_amended_20tax_20return more:bizfinance Group-term life insurance does not include the following insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. Amended tax return more:label_amended_20tax_20return more:bizfinance Life insurance on the life of your employee's spouse or dependent. Amended tax return more:label_amended_20tax_20return more:bizfinance However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. Amended tax return more:label_amended_20tax_20return more:bizfinance See De Minimis (Minimal) Benefits , earlier in this section. Amended tax return more:label_amended_20tax_20return more:bizfinance Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met. Amended tax return more:label_amended_20tax_20return more:bizfinance See Regulations section 1. Amended tax return more:label_amended_20tax_20return more:bizfinance 79-1 for details. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, treat the following individuals as employees. Amended tax return more:label_amended_20tax_20return more:bizfinance A current common-law employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A full-time life insurance agent who is a current statutory employee. Amended tax return more:label_amended_20tax_20return more:bizfinance An individual who was formerly your employee under (1) or (2). Amended tax return more:label_amended_20tax_20return more:bizfinance A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction and control. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception for S corporation shareholders. Amended tax return more:label_amended_20tax_20return more:bizfinance   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Amended tax return more:label_amended_20tax_20return more:bizfinance A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Amended tax return more:label_amended_20tax_20return more:bizfinance Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Amended tax return more:label_amended_20tax_20return more:bizfinance The 10-employee rule. Amended tax return more:label_amended_20tax_20return more:bizfinance   Generally, life insurance is not group-term life insurance unless you provide it to at least 10 full-time employees at some time during the year. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this rule, count employees who choose not to receive the insurance unless, to receive it, they must contribute to the cost of benefits other than the group-term life insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. Amended tax return more:label_amended_20tax_20return more:bizfinance However, do not count an employee who must pay part or all of the cost of permanent benefits to get insurance, unless that employee chooses to receive it. Amended tax return more:label_amended_20tax_20return more:bizfinance A permanent benefit is an economic value extending beyond one policy year (for example, a paid-up or cash-surrender value) that is provided under a life insurance policy. Amended tax return more:label_amended_20tax_20return more:bizfinance Exceptions. Amended tax return more:label_amended_20tax_20return more:bizfinance   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. Amended tax return more:label_amended_20tax_20return more:bizfinance If evidence that the employee is insurable is required, it is limited to a medical questionnaire (completed by the employee) that does not require a physical. Amended tax return more:label_amended_20tax_20return more:bizfinance You provide the insurance to all your full-time employees or, if the insurer requires the evidence mentioned in (1), to all full-time employees who provide evidence the insurer accepts. Amended tax return more:label_amended_20tax_20return more:bizfinance You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. Amended tax return more:label_amended_20tax_20return more:bizfinance See Regulations section 1. Amended tax return more:label_amended_20tax_20return more:bizfinance 79-1 for details. Amended tax return more:label_amended_20tax_20return more:bizfinance   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. Amended tax return more:label_amended_20tax_20return more:bizfinance You provide the insurance under a common plan covering your employees and the employees of at least one other employer who is not related to you. Amended tax return more:label_amended_20tax_20return more:bizfinance The insurance is restricted to, but mandatory for, all your employees who belong to, or are represented by, an organization (such as a union) that carries on substantial activities besides obtaining insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. Amended tax return more:label_amended_20tax_20return more:bizfinance   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. Amended tax return more:label_amended_20tax_20return more:bizfinance They were 65 or older. Amended tax return more:label_amended_20tax_20return more:bizfinance They customarily work 20 hours or less a week or 5 months or less in a calendar year. Amended tax return more:label_amended_20tax_20return more:bizfinance They have not been employed for the waiting period given in the policy. Amended tax return more:label_amended_20tax_20return more:bizfinance This waiting period cannot be more than 6 months. Amended tax return more:label_amended_20tax_20return more:bizfinance Exclusion from wages. Amended tax return more:label_amended_20tax_20return more:bizfinance   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. Amended tax return more:label_amended_20tax_20return more:bizfinance You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. Amended tax return more:label_amended_20tax_20return more:bizfinance In addition, you do not have to withhold federal income tax or pay FUTA tax on any group-term life insurance you provide to an employee. Amended tax return more:label_amended_20tax_20return more:bizfinance Coverage over the limit. Amended tax return more:label_amended_20tax_20return more:bizfinance   You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Amended tax return more:label_amended_20tax_20return more:bizfinance Also, show it in box 12 with code “C. Amended tax return more:label_amended_20tax_20return more:bizfinance ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Amended tax return more:label_amended_20tax_20return more:bizfinance   Figure the monthly cost of the insurance to include in the employee's wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in Table 2-2. Amended tax return more:label_amended_20tax_20return more:bizfinance For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. Amended tax return more:label_amended_20tax_20return more:bizfinance You must prorate the cost from the table if less than a full month of coverage is involved. Amended tax return more:label_amended_20tax_20return more:bizfinance Table 2-2. Amended tax return more:label_amended_20tax_20return more:bizfinance Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . Amended tax return more:label_amended_20tax_20return more:bizfinance 05 25 through 29 . Amended tax return more:label_amended_20tax_20return more:bizfinance 06 30 through 34 . Amended tax return more:label_amended_20tax_20return more:bizfinance 08 35 through 39 . Amended tax return more:label_amended_20tax_20return more:bizfinance 09 40 through 44 . Amended tax return more:label_amended_20tax_20return more:bizfinance 10 45 through 49 . Amended tax return more:label_amended_20tax_20return more:bizfinance 15 50 through 54 . Amended tax return more:label_amended_20tax_20return more:bizfinance 23 55 through 59 . Amended tax return more:label_amended_20tax_20return more:bizfinance 43 60 through 64 . Amended tax return more:label_amended_20tax_20return more:bizfinance 66 65 through 69 1. Amended tax return more:label_amended_20tax_20return more:bizfinance 27 70 and older 2. Amended tax return more:label_amended_20tax_20return more:bizfinance 06 You figure the total cost to include in the employee's wages by multiplying the monthly cost by the number of full months' coverage at that cost. Amended tax return more:label_amended_20tax_20return more:bizfinance Example. Amended tax return more:label_amended_20tax_20return more:bizfinance Tom's employer provides him with group-term life insurance coverage of $200,000. Amended tax return more:label_amended_20tax_20return more:bizfinance Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance Tom's employer must include $170 in his wages. Amended tax return more:label_amended_20tax_20return more:bizfinance The $200,000 of insurance coverage is reduced by $50,000. Amended tax return more:label_amended_20tax_20return more:bizfinance The yearly cost of $150,000 of coverage is $270 ($. Amended tax return more:label_amended_20tax_20return more:bizfinance 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. Amended tax return more:label_amended_20tax_20return more:bizfinance The employer also enters $170 in box 12 with code “C. Amended tax return more:label_amended_20tax_20return more:bizfinance ” Coverage for dependents. Amended tax return more:label_amended_20tax_20return more:bizfinance   Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount is not more than $2,000. Amended tax return more:label_amended_20tax_20return more:bizfinance If the face amount is greater than $2,000, the entire cost of the dependent coverage must be included in income unless the amount over $2,000 is purchased with employee contributions on an after-tax basis. Amended tax return more:label_amended_20tax_20return more:bizfinance The cost of the insurance is determined by using Table 2-2. Amended tax return more:label_amended_20tax_20return more:bizfinance Former employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   When group-term life insurance over $50,000 is provided to an employee (including retirees) after his or her termination, the employee share of social security and Medicare taxes on that period of coverage is paid by the former employee with his or her tax return and is not collected by the employer. Amended tax return more:label_amended_20tax_20return more:bizfinance You are not required to collect those taxes. Amended tax return more:label_amended_20tax_20return more:bizfinance Use the table above to determine the amount of social security and Medicare taxes owed by the former employee for coverage provided after separation from service. Amended tax return more:label_amended_20tax_20return more:bizfinance Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. Amended tax return more:label_amended_20tax_20return more:bizfinance ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception for key employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   Generally, if your group-term life insurance plan favors key employees as to participation or benefits, you must include the entire cost of the insurance in your key employees' wages. Amended tax return more:label_amended_20tax_20return more:bizfinance This exception generally does not apply to church plans. Amended tax return more:label_amended_20tax_20return more:bizfinance When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. Amended tax return more:label_amended_20tax_20return more:bizfinance Include the cost in boxes 1, 3, and 5 of Form W-2. Amended tax return more:label_amended_20tax_20return more:bizfinance However, you do not have to withhold federal income tax or pay FUTA tax on the cost of any group-term life insurance you provide to an employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this purpose, the cost of the insurance is the greater of the following amounts. Amended tax return more:label_amended_20tax_20return more:bizfinance The premiums you pay for the employee's insurance. Amended tax return more:label_amended_20tax_20return more:bizfinance See Regulations section 1. Amended tax return more:label_amended_20tax_20return more:bizfinance 79-4T(Q&A 6) for more information. Amended tax return more:label_amended_20tax_20return more:bizfinance The cost you figure using Table 2-2. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. Amended tax return more:label_amended_20tax_20return more:bizfinance See section 416(i) of the Internal Revenue Code for more information. Amended tax return more:label_amended_20tax_20return more:bizfinance An officer having annual pay of more than $170,000. Amended tax return more:label_amended_20tax_20return more:bizfinance An individual who for 2014 was either of the following. Amended tax return more:label_amended_20tax_20return more:bizfinance A 5% owner of your business. Amended tax return more:label_amended_20tax_20return more:bizfinance A 1% owner of your business whose annual pay was more than $150,000. Amended tax return more:label_amended_20tax_20return more:bizfinance   A former employee who was a key employee upon retirement or separation from service is also a key employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   Your plan does not favor key employees as to participation if at least one of the following is true. Amended tax return more:label_amended_20tax_20return more:bizfinance It benefits at least 70% of your employees. Amended tax return more:label_amended_20tax_20return more:bizfinance At least 85% of the participating employees are not key employees. Amended tax return more:label_amended_20tax_20return more:bizfinance It benefits employees who qualify under a set of rules you set up that do not favor key employees. Amended tax return more:label_amended_20tax_20return more:bizfinance   Your plan meets this participation test if it is part of a cafeteria plan (discussed in section 1) and it meets the participation test for those plans. Amended tax return more:label_amended_20tax_20return more:bizfinance   When applying this test, do not consider employees who: Have not completed 3 years of service, Are part-time or seasonal, Are nonresident aliens who receive no U. Amended tax return more:label_amended_20tax_20return more:bizfinance S. Amended tax return more:label_amended_20tax_20return more:bizfinance source earned income from you, or Are not included in the plan but are in a unit of employees covered by a collective bargaining agreement, if the benefits provided under the plan were the subject of good-faith bargaining between you and employee representatives. Amended tax return more:label_amended_20tax_20return more:bizfinance   Your plan does not favor key employees as to benefits if all benefits available to participating key employees are also available to all other participating employees. Amended tax return more:label_amended_20tax_20return more:bizfinance Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. Amended tax return more:label_amended_20tax_20return more:bizfinance S corporation shareholders. Amended tax return more:label_amended_20tax_20return more:bizfinance   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the cost of all group-term life insurance coverage you provide the 2% shareholder in his or her wages. Amended tax return more:label_amended_20tax_20return more:bizfinance When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. Amended tax return more:label_amended_20tax_20return more:bizfinance Include the cost in boxes 1, 3, and 5 of Form W-2. Amended tax return more:label_amended_20tax_20return more:bizfinance However, you do not have to withhold federal income tax or pay federal unemployment tax on the cost of any group-term life insurance coverage you provide to the 2% shareholder. Amended tax return more:label_amended_20tax_20return more:bizfinance Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. Amended tax return more:label_amended_20tax_20return more:bizfinance Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. Amended tax return more:label_amended_20tax_20return more:bizfinance Contributions to the account are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. Amended tax return more:label_amended_20tax_20return more:bizfinance The medical expenses must not be reimbursable by insurance or other sources and their payment from HSA funds (distribution) will not give rise to a medical expense deduction on the individual's federal income tax return. Amended tax return more:label_amended_20tax_20return more:bizfinance For more information about HSAs, visit the Department of Treasury's website at www. Amended tax return more:label_amended_20tax_20return more:bizfinance treasury. Amended tax return more:label_amended_20tax_20return more:bizfinance gov and enter “HSA” in the search box. Amended tax return more:label_amended_20tax_20return more:bizfinance Eligibility. Amended tax return more:label_amended_20tax_20return more:bizfinance   A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance except for permitted insurance listed under section 223(c)(3) or insurance for accidents, disability, dental care, vision care, or long-term care. Amended tax return more:label_amended_20tax_20return more:bizfinance For calendar year 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage and $12,700 for family coverage. Amended tax return more:label_amended_20tax_20return more:bizfinance   There are no income limits that restrict an individual's eligibility to contribute to an HSA nor is there a requirement that the account owner have earned income to make a contribution. Amended tax return more:label_amended_20tax_20return more:bizfinance Exceptions. Amended tax return more:label_amended_20tax_20return more:bizfinance   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. Amended tax return more:label_amended_20tax_20return more:bizfinance Also, an employee's participation in a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) generally disqualifies the individual (and employer) from making contributions to his or her HSA. Amended tax return more:label_amended_20tax_20return more:bizfinance However, an individual may qualify to participate in an HSA if he or she is participating in only a limited-purpose FSA or HRA or a post-deductible FSA. Amended tax return more:label_amended_20tax_20return more:bizfinance For more information, see Other employee health plans in Publication 969. Amended tax return more:label_amended_20tax_20return more:bizfinance Employer contributions. Amended tax return more:label_amended_20tax_20return more:bizfinance   Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. Amended tax return more:label_amended_20tax_20return more:bizfinance For 2014, you can contribute up to $3,300 for self-only coverage or $6,550 for family coverage to a qualified individual's HSA. Amended tax return more:label_amended_20tax_20return more:bizfinance   The contribution amounts listed above are increased by $1,000 for a qualified individual who is age 55 or older at any time during the year. Amended tax return more:label_amended_20tax_20return more:bizfinance For two qualified individuals who are married to each other and who each are age 55 or older at any time during the year, each spouse's contribution limit is increased by $1,000 provided each spouse has a separate HSA. Amended tax return more:label_amended_20tax_20return more:bizfinance No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. Amended tax return more:label_amended_20tax_20return more:bizfinance Nondiscrimination rules. Amended tax return more:label_amended_20tax_20return more:bizfinance    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. Amended tax return more:label_amended_20tax_20return more:bizfinance Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. Amended tax return more:label_amended_20tax_20return more:bizfinance   For guidance on employer comparable contributions to HSAs under section 4980G in instances where an employee has not established an HSA by December 31 and in instances where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses, see Regulations section 54. Amended tax return more:label_amended_20tax_20return more:bizfinance 4980G-4. Amended tax return more:label_amended_20tax_20return more:bizfinance Exception. Amended tax return more:label_amended_20tax_20return more:bizfinance   The Tax Relief and Health Care Act of 2006 allows employers to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee. Amended tax return more:label_amended_20tax_20return more:bizfinance A highly compensated employee for 2014 is an employee who meets either of the following tests. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee was a 5% owner at any time during the year or the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee received more than $115,000 in pay for the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Amended tax return more:label_amended_20tax_20return more:bizfinance Partnerships and S corporations. Amended tax return more:label_amended_20tax_20return more:bizfinance   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. Amended tax return more:label_amended_20tax_20return more:bizfinance Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances. Amended tax return more:label_amended_20tax_20return more:bizfinance Cafeteria plans. Amended tax return more:label_amended_20tax_20return more:bizfinance   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. Amended tax return more:label_amended_20tax_20return more:bizfinance However, cafeteria plan nondiscrimination rules still apply. Amended tax return more:label_amended_20tax_20return more:bizfinance For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. Amended tax return more:label_amended_20tax_20return more:bizfinance Contributions that favor lower-paid employees are not prohibited. Amended tax return more:label_amended_20tax_20return more:bizfinance Reporting requirements. Amended tax return more:label_amended_20tax_20return more:bizfinance   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. Amended tax return more:label_amended_20tax_20return more:bizfinance ” The trustee or custodian of the HSA, generally a bank or insurance company, reports distributions from the HSA using Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Amended tax return more:label_amended_20tax_20return more:bizfinance Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. Amended tax return more:label_amended_20tax_20return more:bizfinance It is furnished on your business premises. Amended tax return more:label_amended_20tax_20return more:bizfinance It is furnished for your convenience. Amended tax return more:label_amended_20tax_20return more:bizfinance The employee must accept it as a condition of employment. Amended tax return more:label_amended_20tax_20return more:bizfinance Different tests may apply to lodging furnished by educational institutions. Amended tax return more:label_amended_20tax_20return more:bizfinance See section 119(d) of the Internal Revenue Code for details. Amended tax return more:label_amended_20tax_20return more:bizfinance The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. Amended tax return more:label_amended_20tax_20return more:bizfinance On your business premises. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, your business premises is generally your employee's place of work. Amended tax return more:label_amended_20tax_20return more:bizfinance For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. Amended tax return more:label_amended_20tax_20return more:bizfinance For your convenience. Amended tax return more:label_amended_20tax_20return more:bizfinance   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. Amended tax return more:label_amended_20tax_20return more:bizfinance You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. Amended tax return more:label_amended_20tax_20return more:bizfinance This is true even if a law or an employment contract provides that the lodging is furnished as pay. Amended tax return more:label_amended_20tax_20return more:bizfinance However, a written statement that the lodging is furnished for your convenience is not sufficient. Amended tax return more:label_amended_20tax_20return more:bizfinance Condition of employment. Amended tax return more:label_amended_20tax_20return more:bizfinance   Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. Amended tax return more:label_amended_20tax_20return more:bizfinance Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. Amended tax return more:label_amended_20tax_20return more:bizfinance   It does not matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. Amended tax return more:label_amended_20tax_20return more:bizfinance Example. Amended tax return more:label_amended_20tax_20return more:bizfinance A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. Amended tax return more:label_amended_20tax_20return more:bizfinance If Joan chooses to live at the hospital, the hospital cannot exclude the value of the lodging from her wages because she is not required to live at the hospital to properly perform the duties of her employment. Amended tax return more:label_amended_20tax_20return more:bizfinance S corporation shareholders. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Amended tax return more:label_amended_20tax_20return more:bizfinance A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Amended tax return more:label_amended_20tax_20return more:bizfinance Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Amended tax return more:label_amended_20tax_20return more:bizfinance Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. Amended tax return more:label_amended_20tax_20return more:bizfinance De Minimis Meals You can exclude any occasional meal or meal money you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. Amended tax return more:label_amended_20tax_20return more:bizfinance The exclusion applies, for example, to the following items. Amended tax return more:label_amended_20tax_20return more:bizfinance Coffee, doughnuts, or soft drinks. Amended tax return more:label_amended_20tax_20return more:bizfinance Occasional meals or meal money provided to enable an employee to work overtime. Amended tax return more:label_amended_20tax_20return more:bizfinance However, the exclusion does not apply to meal money figured on the basis of hours worked. Amended tax return more:label_amended_20tax_20return more:bizfinance Occasional parties or picnics for employees and their guests. Amended tax return more:label_amended_20tax_20return more:bizfinance This exclusion also applies to meals you provide at an employer-operated eating facility for employees if the annual revenue from the facility equals or exceeds the direct costs of the facility. Amended tax return more:label_amended_20tax_20return more:bizfinance For this purpose, your revenue from providing a meal is considered equal to the facility's direct operating costs to provide that meal if its value can be excluded from an employee's wages as explained under Meals on Your Business Premises , later. Amended tax return more:label_amended_20tax_20return more:bizfinance If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. Amended tax return more:label_amended_20tax_20return more:bizfinance The 50% limit on deductions for the cost of meals does not apply. Amended tax return more:label_amended_20tax_20return more:bizfinance The deduction limit on meals is discussed in chapter 2 of Publication 535. Amended tax return more:label_amended_20tax_20return more:bizfinance Employee. Amended tax return more:label_amended_20tax_20return more:bizfinance   For this exclusion, treat any recipient of a de minimis meal as