Taxation of Employee Benefits Flashcards
Are health insurance proceeds included in income? What about employer paid premiums for health insurance?
- If premiums paid by taxpayer: NO (even if substitute for lost wages)
- If premiums paid by employer: Not if reimbursement for qualified medical expenses
- No
Summarize disability insurance inclusions/exclusions with income.
- Premiums paid by taxpayer: Not deductible
- Proceeds from taxpayer paid policy: Not included in income
- Premiums paid by employer: Not included in income; deductible by employer
- Proceeds from employer paid policy: Included in income
Are life insurance premiums paid by an employer included in income?
- No. Excluded on basis of group TERM life insurance
- Limit on exclusion are premiums necessary for $50,000 face value policy. Over this premiums will be included in income
- Employer paid premiums on WHOLE life insurance would be included in income
Can self employed individuals deduct health insurance premiums?
-Yes. 100% deductible but cannot exceed net earnings from self employment
Are employer paid premiums for disability insurance and long term care policies included in income?
-No. Excluded
Are employer paid premiums for wage continuation insurance included in income?
-Yes
Are personal expenses paid by employer included in income?
-Yes
When is food and lodging provided by employer excluded from income?
When following conditions are met:
- Provision for convenience of employer - In kind (not cash) on employer's premises - Employer must require employee to accept lodging as a condition of employment
Are fringe benefits included in employee’s income? Give examples of fringe benefits.
- No excluded
- Working condition- expense that would’ve been deductible by employee had he paid it
- De minimus fringe- small benefits ex. using fax machine, coffee, etc.
- No additional cost services (remember when more than one line of business, exclusion only applies to business line employee works in and only to services, not products)
Are employee discounts included in income?
-No if discount is not excessive (20% for value of services and average gross profit margin of employer for products)
Are nominal gifts included in income?
-No excluded up to $25 per employee as long as gifts aren’t cash or gift certificates
Are safety and length of service achievement awards included in income?
- No excluded and subject to a limit of $400 if not part of a qualified plan $1,600 if part of one
- Award can be given no more than once every 5 years
Employer reimbursements for mass transit transportation and parking excludible up to what limits? Commuting w/ a bicycle?
- Mass Transit: $130/month
- Parking: $250/month
- Bicycle: $20/month
What are the other employee benefits that are excluded?
- Child and dependent care services so employee can work: $5,000 ($2,500 if MFS)
- Undergraduate and graduate tuition, fees, books, and supplies: $5,250
- Child adoption expenses: $13,400 (credit for same amount if employer doesn’t reimburse)
- Moving expenses if employee could have deducted them
- Use of athletic facilities
- Employer provided retirement advice
Are benefits paid to the family of a deceased employee included in income?
-Yes.
