Excluded: Non-Discriminatory Fringe Benefits AND General Terms related to Fringe Benefits

Question 1

What is a non-discriminatory fringe benefit?

Answer 1

A fringe benefit that is offered to all employees equally, not just to a select group of employees.

Question 2

What is a Fringe Benefit?

Answer 2

1. pay in addition to what is specifically stated the employee’s wage/salary
2. From the employer to the employee
3. Taxable unless excluded
4. Taxed to the employee even if received by someone else

Question 3

What are the Fringe Benefit withholding options?

Answer 3

Employer can choose:

1. normal withholdings on Fringe Benefits OR
2. Alternative Rule amount of a straight 22% (2018-2026)

Question 4

What is the General Valuation Rule for Fringe Benefits?

Answer 4

1. taxable fringe benefits are included in wages at their FMV
2. The taxable amount is reduced by the amount the employee paid for the fringe benefit

Question 5

Types of Non-Discriminatory Fringe Benefits that are excluded from GI? (7)

Answer 5

1. No Additional Cost
2. Qualified Employee Discount
3. Cafeteria Plan/ Flexible Spending Plan
4. Adoption expenses
5. Dependent Care expenses
6. Education Assistance
7. Athletic Facility

Question 6

What is a non-accountable Fringe Benefit Plan?

Answer 6

1. The plan does NOT meet one of the following requirements:
   - business connection
   - adequate accounting
   - repayment of excess reimbursements by employee
2. Fully taxable

Question 7

What are the requirements for a plan to be considered an Accountable Plan?

Answer 7

1. business connection to expenses (expenses incurred while performing services for employer)
2. Adequate accounting within a reasonable period of time
3. excess reimbursements are repaid by the employee within a reasonable period of time

Question 8

Exceptions to the Adequate Accounting rule for fringe benefits to be considered excluded from GI?

Answer 8

1. meals/Lodging Per Diem <= allowable federal rate
2. Individual expenses < $75 (except lodging)
3. Transportation expenses were receipts are not available

Question 9

What is wage re-characterization?

Answer 9

An employee receives a reimbursement whether or not expenses are incurred. Fully taxable!

Question 10

What sources of dependent care benefits can be excluded from GI?

Answer 10

1. amounts paid by the employer to the taxpayer/care provider
2. FMV of employer provided care
3. Pre-tax contributions to a Flexible Spending Account

Question 11

What is the maximum exclusion for Dependent Care Benefits?

Answer 11

1. $5000 per employee
2. Can not be > Smaller of:
   - Earned Income of the employee OR
   - Earned income of the of the spouse
   * must be a non-discriminatory plan**

Question 12

List health/medical plans were employer contributions )can be excluded as part of a fringe benefit? (

Answer 12

1. Accident/health/long term care insurance
2. HSA
3. HRA
4. FSA
5. MSA or Archer
6. Direct reimbursement of medical expenses (not for work missed = taxable)
7. Cafeteria Plan

Question 13

What is a Cafeteria Plan fringe benefit?

Answer 13

1. non-discriminatory
2. a plan offering a variety of programs were employer contributions are excluded from GI
3. Employee can choose which programs to participate in
4. If the employee chooses cash it is INCLUDED in GI

Question 14

What is a Flexible Spending Plan?

Answer 14

1, non-discriminatory plan

2. employee agrees to accept less cash in exchange for employer paying certain costs (ie: dependent care) for the employee (EXCLUDED from GI)
3. use it or loose it plans

Question 15

When is employer paid use of an athletic facility excluded from GI?

Answer 15

1. on employer’s premises (not a public gym)
2. only for use of employees and family members
3. NOT a paid membership to a gym
4. non-discriminatory plan

Question 16

Requirements for “No Additional Cost” fringe benefit to be excluded from GI (4)

Answer 16

1. non-discriminatory
2. service to employee that does not have substantial additional cost for the employer (NOT PROPERTY)
3. service is offered to customers during normal course of business
4. service is within the line of business in which the employee works

Question 17

For a “No Additional Cost” fringe benefit what is considered “substantial additional cost”?

Answer 17

1. costs the employer money
2. lost revenue
3. substantial amount of time is spent providing the service

Question 18

What groups are considered “employees” for the “No Additional Cost” and “Qualified Employee Discount” fringe benefits? (5)

Answer 18

1. current employees
2. former employees - retired/disabled
3. widow/widower of person who died while an employee, retired or disabled while working
4. certain lease employees
5. Reciprocal Agreement employees

Question 19

Requirements for “Qualified Employee Discount” fringe benefit exclusion from GI. (5)

Answer 19

1. non-discriminatory
2. not available for real/investment property
3. discount on qualified property/service offered in the normal course of business
4. for employees personal use
5. Discount does not exceed:
   - normal gross profit percentage OR
   - 20% of what a normal customer price

Question 20

Requirements for a Qualified Education Assistance plan fringe benefit(5)

Answer 20

1. undergraduate/graduate plan
2. not required to be job related
3. written plan
4. not part of a Cafeteria Plan
5. Assistance is not greater than $5250/year
   (benefit may/may not be excluded from GI)

Question 21

Is an employer’s reimbursement of education expenses to meet the minimum requirements of the job included/excluded in GI?

Answer 21

Included

Question 22

Is an employer’s reimbursement of education expenses that qualify the employee for a new trade or business included/excluded from GI?

Answer 22

Included

Question 23

Is an employer’s reimbursement of education expenses for education required by law/employer to keep the present salary, status or job included/excluded in GI?

Answer 23

Excluded

Question 24

Is an employer’s reimbursement of education expenses for education needed in order to maintain or improve current job skills included/excluded from GI?

Answer 24

excluded

Question 25

Requirements for “Qualified Campus Lodging” exclusion of fringe benefits

Answer 25

1. employee of the institution where home will be
2. applies to employee, spouse, dependents
3. located on/near campus or academic health center
4. Must pay adequate rent. Lesser of:
   - 5% of appraisal value OR
   - average amount for rentals
5. Rent Less than #4 = Taxable