Form 14581 - Fslg Compliance Self-Assessment Page 8

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Page 8
Flag Item Fringe Benefits – See
Publication 15-B
Publication 5137, Fringe Benefit Guide
Does the entity have an “accountable plan” for reimbursement of business expenses incurred
by employees?
Note: In general, reimbursements or advances for expenses paid by the employer on behalf of the employee are
taxable unless they are working condition fringe benefits and are ordinary and necessary employee business
expenses that would otherwise qualify for a deduction by the employee, and the reimbursements or advances are
made under an accountable plan. For payments to be considered to be made under an accountable plan, the
employee must:
a) Incur the expenses in the performance of work,
b) Substantiate the expenses within a reasonable period of time, and
c) Return any amounts in excess of expenses within a reasonable period of time.
If accountable plan rules are met, no tax reporting is necessary. If the rules are not met, the reimbursements or
advances are included in wages on Form W-2 and subject to the withholding and payment of employment taxes.
The employee may deduct expenses as miscellaneous itemized deductions on his or her Form 1040.
Does the entity include the taxable amount of the following fringe benefits as wages when
A. Personal use of a government-owned vehicle
Note: Unless it is excludable as a qualified non-personal use vehicle, the personal use of a government-owned
vehicle is a taxable fringe benefit. Personal use includes the value of commuting to and from work in a government-
owned vehicle, even if the vehicle is taken home for the convenience of the employer. The fair market value of the
fringe benefit must be included in wages and is subject to income and employment taxes. However, employee use
of a qualified non-personal use vehicle qualifies as a working condition fringe. You can exclude the value of that use
from employee income. A qualified non-personal use vehicle is any vehicle the employee is not likely to use more
than minimally for personal purposes because of its design.
The value of the use of the vehicle is determined using one of these methods.
1) General valuation rule: the fair market value of a fringe benefit is defined as the price a willing buyer would pay
to a willing seller in an arm’s-length transaction.
2) Alternate valuation rules: each of the following may be used under certain circumstances:
a. Lease value rule- Determines the benefit by determining the annual lease value of the vehicle.
b. Cents-per-mile rule- Personal use may be included in wages at a mileage rate (56.5 cents per mile for 2013)
c. Commuting rule – An amount of $1.50 per one way commute is a taxable fringe benefit.
Note: A detailed discussion of the valuation rules are included in
B. Clothing provided by the employer
Note: Clothing and uniforms provided by the employer are excluded from income if required by work and not
suitable for non-business use.
C. Group-Term Life Insurance
Note: The annual cost of $50,000 of group-term life insurance may be excludable from social security, Medicare,
and income tax for each employee. The table for determining the cost of additional insurance is included in
The cost of group-term life insurance in excess of $50,000 is subject to social security and Medicare, but not to
income tax withholding.
D. Meals
Note: Meals may be excludable from income in the following cases:
• “De minimis” meals, for example, occasional group meals.
• Meals for the convenience of the employer, provided on the business premises
E. Lodging
Note: Excludable if for employer’s convenience as a condition of employment, if on the employer’s business
premises. Lodging costs may also be excludable if paid for or reimbursed as working condition fringe.
Publication 15-B
for information on lodging as a fringe benefit.
Catalog Number 66247V
(Rev. 3-2015)


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