Form Rev-415 As - Employer Withholding Information Guide Page 7
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24Generally, an employer provides a service or property when
the company assumes the financial responsibility for the
liability or payment. In other words, the expense is billed to the
company, and the company is responsible for the payments.
For example, a company seeking to provide transportation as
a nontaxable benefit for its employees could use a company
van to transport them. The benefit becomes taxable when
the company reimburses employees for bus fare to commute
or provides a transportation allowance.
Federally excludable no-additional cost services, qualified
employee discounts, working condition fringe benefits or
qualified transportation fringe benefits are not considered
taxable so long as the employee does not have the choice
between cash and the benefit, or the employee does not
reduce his/her salary in order to receive the benefit. For
example, a program under which an employee is furnished
parking facilities, use of company grounds, picnic areas or a
workout facility, at no reduction in the employee’s salary and
where the employee is not reimbursed for the benefit, provides
benefits not considered compensation, and thus, not subject
to withholding.
Taxable Benefits
Non-cash benefits, which are reportable as compensation
under Internal Revenue Service rules, are generally taxable
for Pennsylvania personal income tax purposes and are
therefore subject to withholding. Taxable benefits include,
but are not limited to:
•
Payments made by the employer to help employees with
adoption expenses;
•
Payments made by the employer to help employees with
additional medical or dental expenses not covered by
medical insurance, unless allowable as an ordinary,
reasonable, and necessary business expense (medical
expenses paid under a qualifying self-insured medical
reimbursement account such as a medical savings
account, are not taxable);
•
Life insurance payments made by the employer on
employees’ dependents;
•
Amounts paid by the employer for non-job related
educational assistance provided to employees or their
dependents;
•
Amounts paid to employees in lieu of using vacation
days; and
•
Payments by employers into pension plans, 401(k) plans
or other retirement plans – made pursuant to the
employee’s election, by salary reduction agreement or
through periodic payroll deductions, – are taxable to
employees and should be included in Pennsylvania gross
wages on their W-2 forms.
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