Excluded: Discriminatory Fringe Benefits

Question 1

What types of Fringe Benefits allow discrimination? (4)

Answer 1

1. De Minimus
2. Working Condition
3. Qualified Transportation
4. Qualified Retirement Services

Question 2

What is a “Working Condition” Fringe Benefit?

Answer 2

Property/service provided by the employer so that the employee can perform their job.

Question 3

Which groups qualify as employees for Working Condition fringe benefits? (4)

Answer 3

1. current employees
2. partners
3. independent contractors
4. Board of Directors

Question 4

Requirements for a Working Condition fringe benefit to be excluded from GI?

Answer 4

1. benefit relates to the employer’s business
2. employee would get a depreciation/business deduction if they paid for the item themselves
3. Substantiated records
4. NOT Cash/cash equivalent
5. Discriminatory is okay

Question 5

Requirements for a De Minimus fringe benefit to be excluded from GI? (3)

Answer 5

1. discriminatory okay
2. occasional, infrequent, not routine
3. Value is so small that accounting for it would be unreasonable/impractical
   * *No IRC specifics about amount but generally under $100

Question 6

Benefits NOT considered to be De Minimus (6)

Answer 6

1. membership to country club/athletic club
2. Cash/Cash equivalent (ie: stock)
3. Certain transportation passes/costs
4. Use of employer’s apartment, vacation home, boat
5. . Commuting use of employer’s vehicle for > 1 month
6. Season sports tickets

Question 7

When can an eating facility provided by the employer be considered a De Minimus Fringe Benefit?

Answer 7

1. located near employer’s business
2. Revenue >= Operating cost
   * *if cost>= Revenue then it becomes taxable to employee

Question 8

Requirements for Occasional Meal Reimbursement as a De Minimus Exclusion (4)

Answer 8

1. Can be discriminatory
2. Occasional and reasonable in value
3. provided for and enables overtime work
4. can be a meal OR money for a meal

Question 9

Requirements for transportation reimbursement as a De Minimus fringe benefit exclusion from wages (3)

Answer 9

1. local commuting transportation fare
2. provided occasionally
3. enables overtime work

Question 10

Requirements Special Valuation Rule for commuting in unsafe/unusual working conditions? (5)

Answer 10

1. qualified employee who normally walks /public transits to work
2. unusual/unsafe work conditions
3. $1.50/trip taxable - remainder excluded from wages
4. company has a written policy
5. a normal person would say it is unsafe

Question 11

Are professional licenses and dues paid by the employer included/excluded from wages (GI)?

Answer 11

Considered a working condition fringe.
IF: 
Accountable Plan : exclude
Non accountable plan: include
** Discriminatory - okay**

Question 12

Are allowances/reimbursements for equipment the employer requires excluded/included in wages?

Answer 12

Accountable Plan: exclude

Non-accountable plan: include

Question 13

When is reimbursement/allowance for equipment not excluded from wages?

Answer 13

1. under a non-accountable plan

2. wage re-characterization: employee receives the money whether or not he incurs the expense

Question 14

When can work clothes and uniform allowances/reimbursements be excluded from wages?

Answer 14

1. expenses are substantiated
2. specifically required as a condition of employment
3. not worn or adaptable to general use as ordinary clothing

Question 15

When is safety equipment allowance/reimbursement excluded from GI?

Answer 15

1. provided to create a safe work environment
2. required by employer
3. accountable plan

Question 16

What is the purpose of a Qualified Transportation Fringe (QTF) benefit?

Answer 16

To encourage use of mass transit

Question 17

What are the requirements for QTF to be excluded from wages? (4)

Answer 17

1. okay to be discriminatory
2. personal transportation to/from work
3. Includes:
   - commuter highway vechiles
   - transit pass
   - parking
4. Employees only (no former employees/contractors)

Question 18

What are the exclusion limits for QTF?

Answer 18

1. commuter vechile +mass transit pass = $265/mth
2. parking = $265/mth
3. IF the amount the employer reimburses the TP> limits THEN the excess is included in wages

Question 19

QTF: What are the requirements in order for a vehicle to be considered a “commuter highway vehicle” ? (5)

Answer 19

1. provided by employer
2. used for travel from residence to work
3. Seating >=6 (excluding driver)
4. 1/2 the seats are occupied (excluding driver)
5. > = 80% mileage is for commuting employees to work

Question 20

Are cash advances for QTF excluded from wages?

Answer 20

No. Taxable

Question 21

Are cash reimbursements for QTF excluded from wages?

Answer 21

Yes. If

1. bona fide reimbursement plan
2. employee substantiates expenses

Question 22

What amount is excluded from wages under the Special Valuation for unusual/unsafe conditions for commuting?

Answer 22

1. $1.50/trip will be taxable for the employee

2. remainder of the costs will be excluded from wages

Question 23

What is the exclusion amount for Qualified Bicycle commuting?

Answer 23

None for 2018-2026

Question 24

Requirements for excluding from wages Qualified Retirement Planning Services?

Answer 24

1. okay to be discriminatory plan

2. employee must be part of a Qualified Retirement Plan

Question 25

Are premiums paid by an employer for a Long-term care policy included/excluded from wages?

Answer 25

excluded