Publication 80 - (Circular Ss),federal Tax Guide For Employers In The U.s. Virgin Islands, Guam, American Samoa, And The Commonwealth Of The Northern Mariana Islands Page 6
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24ing of third-party sick pay. For details, see Publication
calendar year. However, see Special accounting rule for
15-A.
fringe benefits provided during November and December
Determine the value of noncash pay (such as goods,
below.
lodging, and meals) by its fair market value. However, see
You can treat the value of a single taxable noncash
Fringe Benefits below. Except for farmworkers and house-
fringe benefit as paid on one or more dates in the same
hold employees, this kind of pay may be subject to social
calendar year, even if the employee gets the entire benefit
security, Medicare, and FUTA taxes.
at one time. However, once you elect the payment dates,
Back pay, including retroactive wage increases (but not
you must report the taxes on your return in the same tax
amounts paid as liquidated damages), is taxed as ordinary
period in which you treated them as paid. This election
wages in the year paid. For information on reporting back
does not apply to a fringe benefit where real property or
pay to the Social Security Administration, see Publication
investment personal property is transferred.
957, Reporting Back Pay and Special Wage Payments to
the Social Security Administration.
Withholding social security and Medicare taxes on
fringe benefits. You add the value of fringe benefits to
Travel and business expenses. Payments to your em-
regular wages for a payroll period and figure social security
ployee for travel and other necessary expenses of your
and Medicare taxes on the total.
business generally are included in taxable wages if (a)
If you withhold less than the required amount of social
your employee is not required to or does not substantiate
security and Medicare taxes from the employee in a calen-
timely those expenses to you with receipts or other docu-
dar year but report the proper amount, you may recover
mentation or (b) you advance an amount to your employee
the taxes from the employee.
for business expenses and your employee is not required
to or does not return timely any amount that he or she does
Depositing taxes on fringe benefits. Once payment
not use for business expenses.
dates for taxable noncash fringe benefits are elected,
taxes are deposited under the general deposit rules (dis-
Sick pay. In general, sick pay is any amount that you pay,
cussed in section 8), including those for timeliness of
under a plan that you take part in, to an employee because
deposit. You may make a reasonable estimate of the value
of sickness or injury. These amounts are sometimes paid
of the fringe benefits deemed to be paid on the date(s)
by a third party, such as an insurance company. In either
elected, for purposes of meeting the timely deposit require-
case, these payments are subject to social security, Medi-
ments. In general, the value of taxable noncash fringe
care, and FUTA taxes (U.S. Virgin Islands only). Sick pay
benefits provided in a calendar year must be determined
becomes exempt from these taxes after the end of 6
by January 31 of the following year.
calendar months after the calendar month the employee
You may claim a refund of overpayments or elect to
last worked for the employer. Publication 15-A explains the
have any overpayment applied to the next employment tax
employment tax rules that apply to sick pay, disability
return. If deposits are underpaid, see Deposit Penalties in
benefits, and similar payments to employees.
section 8.
Valuation of vehicles provided to employees. If you
Fringe Benefits
provide a vehicle to your employees, you may either deter-
mine the actual value of the benefit for the entire calendar
Unless the law provides otherwise, fringe benefits are
year, taking into account the business use of the vehicle, or
includible in the gross income of the employee and are
consider the entire use for the calendar year as personal
subject to employment taxes. Examples of fringe benefits
and include 100% of the value of the vehicle in the
include automobiles or aircraft flights that you provide, free
employee’s income. For reporting information to employ-
or discounted commercial airline flights, vacations, dis-
ees, see the box 14 instructions under Specific Instructions
counts on property or services, memberships in country
for Forms W-2AS, W-2GU, and W-2VI on Form W-3SS.
clubs or other social clubs, and tickets to entertainment or
sporting events. In general, the amount included in the
Special accounting rule for fringe benefits provided
employee’s income is the excess of the fair market value of
during November and December. You may choose to
the benefit over the sum of any amount paid for it by the
treat the value of taxable noncash fringe benefits provided
employee plus any amount excludable by law. For details
during November and December as paid in the next year.
on fringe benefits, see Publication 15-B, Employer’s Tax
However, this applies only to those benefits that you actu-
Guide to Fringe Benefits.
ally provided during November and December, not to
those you merely treated as paid during those months.
When fringe benefits are treated as paid. You can elect
to treat taxable noncash fringe benefits (including personal
If you use this rule, you must notify each affected em-
use of an automobile provided by you) as paid by the pay
ployee between the time of the employee’s last paycheck
period, quarter, or on any other basis that you choose, but
of the calendar year and at or near the time that you give
they must be treated as paid at least annually. You do not
the employee Form W-2VI, W-2GU, W-2AS, or W-2CM. If
have to make a formal election of payment dates or notify
you use the special accounting rule, your employee must
the IRS. You do not have to make this election for all
also use it for the same period that you use it. You cannot
employees, and the election can be changed as often as
use this rule for a fringe benefit of real property or tangible
desired, as long as all benefits provided in a calendar year
or intangible real property of a kind normally held for
are treated as paid no later than December 31 of the
investment that is transferred to your employee.
Page 6
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