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File Tax Extension 2011

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File Tax Extension 2011

File tax extension 2011 Publication 15-B - Main Content Table of Contents 1. File tax extension 2011 Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. File tax extension 2011 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. File tax extension 2011 Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. File tax extension 2011 Rules for Withholding, Depositing, and ReportingTransfer of property. File tax extension 2011 Amount of deposit. File tax extension 2011 Limitation. File tax extension 2011 Conformity rules. File tax extension 2011 Election not to withhold income tax. File tax extension 2011 How To Get Tax Help 1. File tax extension 2011 Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. File tax extension 2011 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. File tax extension 2011 Performance of services. File tax extension 2011   A person who performs services for you does not have to be your employee. File tax extension 2011 A person may perform services for you as an independent contractor, partner, or director. File tax extension 2011 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. File tax extension 2011 Provider of benefit. File tax extension 2011   You are the provider of a fringe benefit if it is provided for services performed for you. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Recipient of benefit. File tax extension 2011   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. File tax extension 2011 That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. File tax extension 2011 For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. File tax extension 2011 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. File tax extension 2011 Section 2 discusses the exclusions that apply to certain fringe benefits. File tax extension 2011 Any benefit not excluded under the rules discussed in section 2 is taxable. File tax extension 2011 Including taxable benefits in pay. File tax extension 2011   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. File tax extension 2011 Any amount the law excludes from pay. File tax extension 2011 Any amount the recipient paid for the benefit. File tax extension 2011 The rules used to determine the value of a fringe benefit are discussed in section 3. File tax extension 2011   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. File tax extension 2011 However, you can use special rules to withhold, deposit, and report the employment taxes. File tax extension 2011 These rules are discussed in section 4. File tax extension 2011   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. File tax extension 2011 However, you may have to report the benefit on one of the following information returns. File tax extension 2011 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. File tax extension 2011 For more information, see the instructions for the forms listed above. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. File tax extension 2011 However, a cafeteria plan can include a qualified 401(k) plan as a benefit. File tax extension 2011 Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. File tax extension 2011 Qualified benefits. File tax extension 2011   A cafeteria plan can include the following benefits discussed in section 2. File tax extension 2011 Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). File tax extension 2011 Adoption assistance. File tax extension 2011 Dependent care assistance. File tax extension 2011 Group-term life insurance coverage (including costs that cannot be excluded from wages). File tax extension 2011 Health savings accounts (HSAs). File tax extension 2011 Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. File tax extension 2011 Benefits not allowed. File tax extension 2011   A cafeteria plan cannot include the following benefits discussed in section 2. File tax extension 2011 Archer MSAs. File tax extension 2011 See Accident and Health Benefits in section 2. File tax extension 2011 Athletic facilities. File tax extension 2011 De minimis (minimal) benefits. File tax extension 2011 Educational assistance. File tax extension 2011 Employee discounts. File tax extension 2011 Employer-provided cell phones. File tax extension 2011 Lodging on your business premises. File tax extension 2011 Meals. File tax extension 2011 Moving expense reimbursements. File tax extension 2011 No-additional-cost services. File tax extension 2011 Transportation (commuting) benefits. File tax extension 2011 Tuition reduction. File tax extension 2011 Working condition benefits. File tax extension 2011 It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). File tax extension 2011 $2,500 limit on a health flexible spending arrangement (FSA). File tax extension 2011   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. File tax extension 2011 For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. File tax extension 2011   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011   For more information, see Notice 2012-40, 2012-26 I. File tax extension 2011 R. File tax extension 2011 B. File tax extension 2011 1046, available at www. File tax extension 2011 irs. File tax extension 2011 gov/irb/2012-26_IRB/ar09. File tax extension 2011 html. File tax extension 2011 Employee. File tax extension 2011   For these plans, treat the following individuals as employees. File tax extension 2011 A current common-law employee. File tax extension 2011 See section 2 in Publication 15 (Circular E) for more information. File tax extension 2011 A full-time life insurance agent who is a current statutory employee. File tax extension 2011 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. File tax extension 2011 Exception for S corporation shareholders. File tax extension 2011   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Plans that favor highly compensated employees. File tax extension 2011   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. File tax extension 2011 A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. File tax extension 2011   A highly compensated employee for this purpose is any of the following employees. File tax extension 2011 An officer. File tax extension 2011 A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. File tax extension 2011 An employee who is highly compensated based on the facts and circumstances. File tax extension 2011 A spouse or dependent of a person described in (1), (2), or (3). File tax extension 2011 Plans that favor key employees. File tax extension 2011   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. File tax extension 2011 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. File tax extension 2011 However, a plan you maintain under a collective bargaining agreement does not favor key employees. File tax extension 2011   A key employee during 2014 is generally an employee who is either of the following. File tax extension 2011 An officer having annual pay of more than $170,000. File tax extension 2011 An employee who for 2014 is either of the following. File tax extension 2011 A 5% owner of your business. File tax extension 2011 A 1% owner of your business whose annual pay was more than $150,000. File tax extension 2011 Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. File tax extension 2011 Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. File tax extension 2011 Eligible employer. File tax extension 2011   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Eligibility and participation requirements. File tax extension 2011   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. File tax extension 2011 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. File tax extension 2011 S. File tax extension 2011 source. File tax extension 2011 Contribution requirements. File tax extension 2011   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. File tax extension 2011 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. File tax extension 2011 More information. File tax extension 2011   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. File tax extension 2011 2. File tax extension 2011 Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. File tax extension 2011 These rules exclude all or part of the value of certain benefits from the recipient's pay. File tax extension 2011 The excluded benefits are not subject to federal income tax withholding. File tax extension 2011 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. File tax extension 2011 This section discusses the exclusion rules for the following fringe benefits. File tax extension 2011 Accident and health benefits. File tax extension 2011 Achievement awards. File tax extension 2011 Adoption assistance. File tax extension 2011 Athletic facilities. File tax extension 2011 De minimis (minimal) benefits. File tax extension 2011 Dependent care assistance. File tax extension 2011 Educational assistance. File tax extension 2011 Employee discounts. File tax extension 2011 Employee stock options. File tax extension 2011 Employer-provided cell phones. File tax extension 2011 Group-term life insurance coverage. File tax extension 2011 Health savings accounts (HSAs). File tax extension 2011 Lodging on your business premises. File tax extension 2011 Meals. File tax extension 2011 Moving expense reimbursements. File tax extension 2011 No-additional-cost services. File tax extension 2011 Retirement planning services. File tax extension 2011 Transportation (commuting) benefits. File tax extension 2011 Tuition reduction. File tax extension 2011 Working condition benefits. File tax extension 2011 See Table 2-1, later, for an overview of the employment tax treatment of these benefits. File tax extension 2011 Table 2-1. File tax extension 2011 Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. File tax extension 2011 ) 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. File tax extension 2011 Exempt, except for certain payments to S corporation employees who are 2% shareholders. File tax extension 2011 Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). File tax extension 2011 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. File tax extension 2011 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). File tax extension 2011 Educational assistance Exempt up to $5,250 of benefits each year. File tax extension 2011 (See Educational Assistance , later in this section. File tax extension 2011 ) Employee discounts Exempt3 up to certain limits. File tax extension 2011 (See Employee Discounts , later in this section. File tax extension 2011 ) Employee stock options See Employee Stock Options , later in this section. File tax extension 2011 Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. File tax extension 2011 Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. File tax extension 2011 (Special rules apply to former employees. File tax extension 2011 ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. File tax extension 2011 (See Health Savings Accounts , later in this section. File tax extension 2011 ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. File tax extension 2011 Meals Exempt if furnished on your business premises for your convenience. File tax extension 2011 Exempt if de minimis. File tax extension 2011 Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. File tax extension 2011 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). File tax extension 2011 (See Transportation (Commuting) Benefits , later in this section. File tax extension 2011 ) Exempt if de minimis. File tax extension 2011 Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). File tax extension 2011 Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. File tax extension 2011 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. File tax extension 2011 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. File tax extension 2011 4 Exemption does not apply to certain key employees under a plan that favors those employees. File tax extension 2011 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. File tax extension 2011 Also, show it in box 12 with code “C. File tax extension 2011 ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. File tax extension 2011 Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. File tax extension 2011 Contributions to the cost of accident or health insurance including qualified long-term care insurance. File tax extension 2011 Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. File tax extension 2011 Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). File tax extension 2011 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. File tax extension 2011 Payments or reimbursements of medical expenses. File tax extension 2011 Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). File tax extension 2011 The payments must be figured without regard to any period of absence from work. File tax extension 2011 Accident or health plan. File tax extension 2011   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. File tax extension 2011 The plan may be insured or noninsured and does not need to be in writing. File tax extension 2011 Employee. File tax extension 2011   For this exclusion, treat the following individuals as employees. File tax extension 2011 A current common-law employee. File tax extension 2011 A full-time life insurance agent who is a current statutory employee. File tax extension 2011 A retired employee. File tax extension 2011 A former employee you maintain coverage for based on the employment relationship. File tax extension 2011 A widow or widower of an individual who died while an employee. File tax extension 2011 A widow or widower of a retired employee. File tax extension 2011 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. File tax extension 2011 Special rule for certain government plans. File tax extension 2011   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. File tax extension 2011 See section 105(j) for details. File tax extension 2011 Exception for S corporation shareholders. File tax extension 2011   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Exclusion from wages. File tax extension 2011   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. File tax extension 2011 Exception for certain long-term care benefits. File tax extension 2011   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. File tax extension 2011 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. File tax extension 2011 However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. File tax extension 2011 S corporation shareholders. File tax extension 2011   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. File tax extension 2011 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. File tax extension 2011 Exception for highly compensated employees. File tax extension 2011   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. File tax extension 2011 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. File tax extension 2011   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. File tax extension 2011   A highly compensated employee for this exception is any of the following individuals. File tax extension 2011 One of the five highest paid officers. File tax extension 2011 An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. File tax extension 2011 An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). File tax extension 2011   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. File tax extension 2011 COBRA premiums. File tax extension 2011   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). File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. File tax extension 2011 Employee. File tax extension 2011   For this exclusion, treat the following individuals as employees. File tax extension 2011 A current employee. File tax extension 2011 A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. File tax extension 2011 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. File tax extension 2011 Exception for S corporation shareholders. File tax extension 2011   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Exclusion from wages. File tax extension 2011   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. File tax extension 2011 The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). File tax extension 2011 See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. File tax extension 2011    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. File tax extension 2011   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. File tax extension 2011 The part of the cost that is more than your allowable deduction (up to the value of the awards). File tax extension 2011 The amount by which the value of the awards exceeds your allowable deduction. File tax extension 2011 Exclude the remaining value of the awards from the employee's wages. File tax extension 2011 Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. File tax extension 2011 It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. File tax extension 2011 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. File tax extension 2011 It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). File tax extension 2011 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. File tax extension 2011 You give reasonable notice of the plan to eligible employees. File tax extension 2011 Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. File tax extension 2011 For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File tax extension 2011 The employee was a 5% owner at any time during the year or the preceding year. File tax extension 2011 The employee received more than $115,000 in pay for the preceding year. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. File tax extension 2011 For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. File tax extension 2011 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. File tax extension 2011 Use code “T” to identify this amount. File tax extension 2011 Exception for S corporation shareholders. File tax extension 2011   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 On-premises facility. File tax extension 2011   The athletic facility must be located on premises you own or lease. File tax extension 2011 It does not have to be located on your business premises. File tax extension 2011 However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. File tax extension 2011 Employee. File tax extension 2011   For this exclusion, treat the following individuals as employees. File tax extension 2011 A current employee. File tax extension 2011 A former employee who retired or left on disability. File tax extension 2011 A widow or widower of an individual who died while an employee. File tax extension 2011 A widow or widower of a former employee who retired or left on disability. File tax extension 2011 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. File tax extension 2011 A partner who performs services for a partnership. File tax extension 2011 De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Examples of de minimis benefits include the following. File tax extension 2011 Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. File tax extension 2011 See Employer-Provided Cell Phones , later in this section, for details. File tax extension 2011 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. File tax extension 2011 Holiday gifts, other than cash, with a low fair market value. File tax extension 2011 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. File tax extension 2011 Meals. File tax extension 2011 See Meals , later in this section, for details. File tax extension 2011 Occasional parties or picnics for employees and their guests. File tax extension 2011 Occasional tickets for theater or sporting events. File tax extension 2011 Transportation fare. File tax extension 2011 See Transportation (Commuting) Benefits , later in this section, for details. File tax extension 2011 Employee. File tax extension 2011   For this exclusion, treat any recipient of a de minimis benefit as an employee. File tax extension 2011 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. File tax extension 2011 The services must be for a qualifying person's care and must be provided to allow the employee to work. File tax extension 2011 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. File tax extension 2011 For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. File tax extension 2011 Employee. File tax extension 2011   For this exclusion, treat the following individuals as employees. File tax extension 2011 A current employee. File tax extension 2011 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. File tax extension 2011 Yourself (if you are a sole proprietor). File tax extension 2011 A partner who performs services for a partnership. File tax extension 2011 Exclusion from wages. File tax extension 2011   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. File tax extension 2011   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. File tax extension 2011 This limit is reduced to $2,500 for married employees filing separate returns. File tax extension 2011   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. File tax extension 2011 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. File tax extension 2011 For more information on the earned income limit, see Publication 503. File tax extension 2011 Exception for highly compensated employees. File tax extension 2011   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. File tax extension 2011   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File tax extension 2011 The employee was a 5% owner at any time during the year or the preceding year. File tax extension 2011 The employee received more than $115,000 in pay for the preceding year. File tax extension 2011 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. File tax extension 2011 Form W-2. File tax extension 2011   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. File tax extension 2011 Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. File tax extension 2011 Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. File tax extension 2011 Example. File tax extension 2011   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. File tax extension 2011 In addition, it provides occasional on-site dependent care to its employees at no cost. File tax extension 2011 Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. File tax extension 2011 In addition, Emily used the on-site dependent care several times. File tax extension 2011 The fair market value of the on-site care was $700. File tax extension 2011 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). File tax extension 2011 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. File tax extension 2011 Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. File tax extension 2011 The exclusion also applies to graduate level courses. File tax extension 2011 Educational assistance means amounts you pay or incur for your employees' education expenses. File tax extension 2011 These expenses generally include the cost of books, equipment, fees, supplies, and tuition. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Nor do they include the cost of lodging, meals, or transportation. File tax extension 2011 Educational assistance program. File tax extension 2011   An educational assistance program is a separate written plan that provides educational assistance only to your employees. File tax extension 2011 The program qualifies only if all of the following tests are met. File tax extension 2011 The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. File tax extension 2011 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. File tax extension 2011 The program does not provide more than 5% of its benefits during the year for shareholders or owners. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 You give reasonable notice of the program to eligible employees. File tax extension 2011 Your program can cover former employees if their employment is the reason for the coverage. File tax extension 2011   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File tax extension 2011 The employee was a 5% owner at any time during the year or the preceding year. File tax extension 2011 The employee received more than $115,000 in pay for the preceding year. File tax extension 2011 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. File tax extension 2011 Employee. File tax extension 2011   For this exclusion, treat the following individuals as employees. File tax extension 2011 A current employee. File tax extension 2011 A former employee who retired, left on disability, or was laid off. File tax extension 2011 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. File tax extension 2011 Yourself (if you are a sole proprietor). File tax extension 2011 A partner who performs services for a partnership. File tax extension 2011 Exclusion from wages. File tax extension 2011   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. File tax extension 2011 Assistance over $5,250. File tax extension 2011   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. File tax extension 2011 Working condition benefits may be excluded from wages. File tax extension 2011 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. File tax extension 2011 See Working Condition Benefits , later, in this section. File tax extension 2011 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. File tax extension 2011 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). File tax extension 2011 Employee. File tax extension 2011   For this exclusion, treat the following individuals as employees. File tax extension 2011 A current employee. File tax extension 2011 A former employee who retired or left on disability. File tax extension 2011 A widow or widower of an individual who died while an employee. File tax extension 2011 A widow or widower of an employee who retired or left on disability. File tax extension 2011 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. File tax extension 2011 A partner who performs services for a partnership. File tax extension 2011 Exclusion from wages. File tax extension 2011   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. File tax extension 2011 For a discount on services, 20% of the price you charge nonemployee customers for the service. File tax extension 2011 For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. File tax extension 2011   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. File tax extension 2011 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. File tax extension 2011 Exception for highly compensated employees. File tax extension 2011   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. File tax extension 2011 All of your employees. File tax extension 2011 A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. File tax extension 2011   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File tax extension 2011 The employee was a 5% owner at any time during the year or the preceding year. File tax extension 2011 The employee received more than $115,000 in pay for the preceding year. File tax extension 2011 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. File tax extension 2011 Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 ” See Regulations section 1. File tax extension 2011 83-7. File tax extension 2011 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. File tax extension 2011 The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. File tax extension 2011 See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. File tax extension 2011 You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. File tax extension 2011 irs. File tax extension 2011 gov/pub/irs-irbs/irb02-19. File tax extension 2011 pdf. File tax extension 2011 See Revenue Ruling 2004-60, 2004-24 I. File tax extension 2011 R. File tax extension 2011 B. File tax extension 2011 1051, available at www. File tax extension 2011 irs. File tax extension 2011 gov/irb/2004-24_IRB/ar13. File tax extension 2011 html. File tax extension 2011 For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Noncompensatory business purposes. File tax extension 2011   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. File tax extension 2011 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. File tax extension 2011 Cell phones provided to promote goodwill, boost morale, or attract prospective employees. File tax extension 2011   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. File tax extension 2011 Additional information. File tax extension 2011   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. File tax extension 2011 R. File tax extension 2011 B. File tax extension 2011 407, available at  www. File tax extension 2011 irs. File tax extension 2011 gov/irb/2011-38_IRB/ar07. File tax extension 2011 html. File tax extension 2011 Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. File tax extension 2011 It provides a general death benefit that is not included in income. File tax extension 2011 You provide it to a group of employees. File tax extension 2011 See The 10-employee rule , later. File tax extension 2011 It provides an amount of insurance to each employee based on a formula that prevents individual selection. File tax extension 2011 This formula must use factors such as the employee's age, years of service, pay, or position. File tax extension 2011 You provide it under a policy you directly or indirectly carry. File tax extension 2011 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. File tax extension 2011 Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. File tax extension 2011 Group-term life insurance does not include the following insurance. File tax extension 2011 Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. File tax extension 2011 Life insurance on the life of your employee's spouse or dependent. File tax extension 2011 However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. File tax extension 2011 See De Minimis (Minimal) Benefits , earlier in this section. File tax extension 2011 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. File tax extension 2011 See Regulations section 1. File tax extension 2011 79-1 for details. File tax extension 2011 Employee. File tax extension 2011   For this exclusion, treat the following individuals as employees. File tax extension 2011 A current common-law employee. File tax extension 2011 A full-time life insurance agent who is a current statutory employee. File tax extension 2011 An individual who was formerly your employee under (1) or (2). File tax extension 2011 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. File tax extension 2011 Exception for S corporation shareholders. File tax extension 2011   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 The 10-employee rule. File tax extension 2011   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. File tax extension 2011   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. File tax extension 2011 For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Exceptions. File tax extension 2011   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. File tax extension 2011   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. File tax extension 2011 See Regulations section 1. File tax extension 2011 79-1 for details. File tax extension 2011   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. File tax extension 2011   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. File tax extension 2011 They were 65 or older. File tax extension 2011 They customarily work 20 hours or less a week or 5 months or less in a calendar year. File tax extension 2011 They have not been employed for the waiting period given in the policy. File tax extension 2011 This waiting period cannot be more than 6 months. File tax extension 2011 Exclusion from wages. File tax extension 2011   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. File tax extension 2011 You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. File tax extension 2011 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. File tax extension 2011 Coverage over the limit. File tax extension 2011   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. File tax extension 2011 Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. File tax extension 2011 Also, show it in box 12 with code “C. File tax extension 2011 ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. File tax extension 2011   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. File tax extension 2011 For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. File tax extension 2011 You must prorate the cost from the table if less than a full month of coverage is involved. File tax extension 2011 Table 2-2. File tax extension 2011 Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . File tax extension 2011 05 25 through 29 . File tax extension 2011 06 30 through 34 . File tax extension 2011 08 35 through 39 . File tax extension 2011 09 40 through 44 . File tax extension 2011 10 45 through 49 . File tax extension 2011 15 50 through 54 . File tax extension 2011 23 55 through 59 . File tax extension 2011 43 60 through 64 . File tax extension 2011 66 65 through 69 1. File tax extension 2011 27 70 and older 2. File tax extension 2011 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. File tax extension 2011 Example. File tax extension 2011 Tom's employer provides him with group-term life insurance coverage of $200,000. File tax extension 2011 Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. File tax extension 2011 Tom's employer must include $170 in his wages. File tax extension 2011 The $200,000 of insurance coverage is reduced by $50,000. File tax extension 2011 The yearly cost of $150,000 of coverage is $270 ($. File tax extension 2011 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. File tax extension 2011 The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. File tax extension 2011 The employer also enters $170 in box 12 with code “C. File tax extension 2011 ” Coverage for dependents. File tax extension 2011   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. File tax extension 2011 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. File tax extension 2011 The cost of the insurance is determined by using Table 2-2. File tax extension 2011 Former employees. File tax extension 2011   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. File tax extension 2011 You are not required to collect those taxes. File tax extension 2011 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. File tax extension 2011 Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. File tax extension 2011 ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. File tax extension 2011 Exception for key employees. File tax extension 2011   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. File tax extension 2011 This exception generally does not apply to church plans. File tax extension 2011 When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. File tax extension 2011 Include the cost in boxes 1, 3, and 5 of Form W-2. File tax extension 2011 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. File tax extension 2011   For this purpose, the cost of the insurance is the greater of the following amounts. File tax extension 2011 The premiums you pay for the employee's insurance. File tax extension 2011 See Regulations section 1. File tax extension 2011 79-4T(Q&A 6) for more information. File tax extension 2011 The cost you figure using Table 2-2. File tax extension 2011   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. File tax extension 2011 See section 416(i) of the Internal Revenue Code for more information. File tax extension 2011 An officer having annual pay of more than $170,000. File tax extension 2011 An individual who for 2014 was either of the following. File tax extension 2011 A 5% owner of your business. File tax extension 2011 A 1% owner of your business whose annual pay was more than $150,000. File tax extension 2011   A former employee who was a key employee upon retirement or separation from service is also a key employee. File tax extension 2011   Your plan does not favor key employees as to participation if at least one of the following is true. File tax extension 2011 It benefits at least 70% of your employees. File tax extension 2011 At least 85% of the participating employees are not key employees. File tax extension 2011 It benefits employees who qualify under a set of rules you set up that do not favor key employees. File tax extension 2011   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. File tax extension 2011   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. File tax extension 2011 S. File tax extension 2011 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. File tax extension 2011   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. File tax extension 2011 Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. File tax extension 2011 S corporation shareholders. File tax extension 2011   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. File tax extension 2011 When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. File tax extension 2011 Include the cost in boxes 1, 3, and 5 of Form W-2. File tax extension 2011 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. File tax extension 2011 Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. File tax extension 2011 Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 For more information about HSAs, visit the Department of Treasury's website at www. File tax extension 2011 treasury. File tax extension 2011 gov and enter “HSA” in the search box. File tax extension 2011 Eligibility. File tax extension 2011   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. File tax extension 2011 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. File tax extension 2011   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. File tax extension 2011 Exceptions. File tax extension 2011   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 For more information, see Other employee health plans in Publication 969. File tax extension 2011 Employer contributions. File tax extension 2011   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. File tax extension 2011 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. File tax extension 2011   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. File tax extension 2011 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. File tax extension 2011 No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. File tax extension 2011 Nondiscrimination rules. File tax extension 2011    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. File tax extension 2011 Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. File tax extension 2011   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. File tax extension 2011 4980G-4. File tax extension 2011 Exception. File tax extension 2011   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. File tax extension 2011 A highly compensated employee for 2014 is an employee who meets either of the following tests. File tax extension 2011 The employee was a 5% owner at any time during the year or the preceding year. File tax extension 2011 The employee received more than $115,000 in pay for the preceding year. File tax extension 2011 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. File tax extension 2011 Partnerships and S corporations. File tax extension 2011   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. File tax extension 2011 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. File tax extension 2011 Cafeteria plans. File tax extension 2011   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. File tax extension 2011 However, cafeteria plan nondiscrimination rules still apply. File tax extension 2011 For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. File tax extension 2011 Contributions that favor lower-paid employees are not prohibited. File tax extension 2011 Reporting requirements. File tax extension 2011   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. File tax extension 2011 ” 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. File tax extension 2011 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. File tax extension 2011 It is furnished on your business premises. File tax extension 2011 It is furnished for your convenience. File tax extension 2011 The employee must accept it as a condition of employment. File tax extension 2011 Different tests may apply to lodging furnished by educational institutions. File tax extension 2011 See section 119(d) of the Internal Revenue Code for details. File tax extension 2011 The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. File tax extension 2011 On your business premises. File tax extension 2011   For this exclusion, your business premises is generally your employee's place of work. File tax extension 2011 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. File tax extension 2011 For your convenience. File tax extension 2011   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. File tax extension 2011 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. File tax extension 2011 This is true even if a law or an employment contract provides that the lodging is furnished as pay. File tax extension 2011 However, a written statement that the lodging is furnished for your convenience is not sufficient. File tax extension 2011 Condition of employment. File tax extension 2011   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. File tax extension 2011 Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. File tax extension 2011   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. File tax extension 2011 Example. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 S corporation shareholders. File tax extension 2011   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. File tax extension 2011 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. File tax extension 2011 The exclusion applies, for example, to the following items. File tax extension 2011 Coffee, doughnuts, or soft drinks. File tax extension 2011 Occasional meals or meal money provided to enable an employee to work overtime. File tax extension 2011 However, the exclusion does not apply to meal money figured on the basis of hours worked. File tax extension 2011 Occasional parties or picnics for employees and their guests. File tax extension 2011 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. File tax extension 2011 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. File tax extension 2011 If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. File tax extension 2011 The 50% limit on deductions for the cost of meals does not apply. File tax extension 2011 The deduction limit on meals is discussed in chapter 2 of Publication 535. File tax extension 2011 Employee. File tax extension 2011   For this exclusion, treat any recipient of a de minimis meal as
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The File Tax Extension 2011

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