CPP Module 4 Flashcards
Fringe Benefits and Other Payments
What is a de minimus fringe benefit?
an item provided to an employee that is small in value, difficult to track, occasionally provided, and not cash or cash equivalent.
What is a no additional cost benefit?
A nontaxable benefit provided by an employer that must be sold to customers and provided to the employee at no substantial cost to the employer.
What is a working condition fringe benefit?
a nontaxable fringe benefit that relates to the employee’s trade or business that is provided to an employee.
What is an accountable plan business expense?
An expense that has a business connection, is substantiated within a reasonable period, and excess advances are returned within a reasonable period.
Excess Parachute Payment
Made due to a change in ownership. Is the amount that exceeds an employee’s 5 year average compensation.
Cents per mile valuation rate is:
IRS Standard mileage rate (.67%) multiplied by personal miles driven to determine taxable value of a company provided vehicle
Vehicle value must be under $62,000
Commuting valuation rate is:
$1.50 per trip or $3.00 per day for company vehicle personal use
How is Dependent Care Assistance taxed?
Taxable when an excess of $5,000 is received during a calendar year.
What W-2 boxes are DCARE reported under?
Box 1, 3, and 5 for taxable benefits. Box 10 for all benefits.
Differential Military pay taxation
Temporary Assignment - subject to FITW, SS, Medicare, and FUTA.
Active Duty - FITW
Formula for taxable benefits (Includable Fringe Benefit Amount)
IFBA = FMV - (EPA - AEL)
FMV Fair Market Value
EPA Employee Paid Amt
AEL Amount Excluded by Law
High Cost Per Diem Rate
$309.00 per day for business travel expenses
Where are allocated tips reported on W-2?
Box 8
Restricted Stock Award taxation
Taxed on the FMV of the stock on the date restrictions end. Subject to FITW, SS, Medicare, and FUTA
Incentive Stock Option taxation
spread from the sale is not considered wages but is capital gain or loss. May result in a profit being included in taxable income.
Nonqualified stock option taxation
The spread is taxable on the date of exercise (date purchased).
Nontaxable GTL insurance coverage amount
$50,000 for self and $2,000 for dependents. Excess is only subject to SS and Medicare.
Nontaxable Education Benefits
All Job-related education or non-job-related education up to $5250.00 per year.
General Vehicle Valuation
Taxable on the amount an individual would pay to lease the vehicle.
Annual Lease Vehicle Valuation
Taxed on FMV of annual lease multiplied by the percentage of personal use.
Qualified Transportation Fringe Benefit
Maximum exclusion amount is $315.00 per month
Special Accounting Rule
When employers define a non-calendar tax year for taxable non-cash benefits. Can treat Nov and December as the next year.
Stock Purchase Plan taxation
lesser of either the difference between the option price and FMV on the purchase date. Or the difference between the FMV and option price on the sale date. Subject to FITW
Tip taxation priority
Social Security, Medicare, FITW.
What are allocated tips?
When all employees reported tips do not amount to at least 8% of sales, the employer is required to allocate tips to bring it to at least 8%.
Non Taxable Award types
Length of Service (5 years), Safety, and Civic/Charitable Awards up to $400.00
Imputed Income
Value of noncash benefits included in employee income, subject to taxation.
What is Form 3921?
Exercise of an Incentive Stock Option. Reports the transfer of the stock purchased in an incentive plan
What is Form 3922?
Transfer of Stock Acquired Through an Employee Stock Purchase Plan.
What is Form 8922?
Third Part Sick Pay Recap. Filed to reconcile differences between W-2 and 941.
What is a 83 (b) election?
Allows an employee the ability to have the FMV of sock included in gross income on the date of the grant of the restricted stock.
What is imputed loan interest?
Difference between the current federal interest rate and a lower employer interest rate on a loan.
When are employee loans taxable?
When the aggregate amount exceeds $10,000 and the interest rate is less than the federal interest rate.
When is back pay taxed?
In the year it is paid, even if it is earned in a previous year.
Sick Pay taxation
Subject to Medicare and SS for first 6 months.
Only subject to FITW if employee submits a W-4S
Adoption Assistance Taxation
Taxable for SS and Medicare. Reported on W-2 in Box 12, Code T.
What taxes are stocks taxed for?
Federal income, medicare, and social security.
