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Free online taxes 5. Free online taxes   How To Get Tax Help Table of Contents Low Income Taxpayer Clinics Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Free online taxes Free help with your tax return. Free online taxes   You can get free help preparing your return nationwide from IRS-certified volunteers. Free online taxes The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Free online taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free online taxes Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Free online taxes In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Free online taxes To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Free online taxes gov, download the IRS2Go app, or call 1-800-906-9887. Free online taxes   As part of the TCE program, AARP offers the Tax-Aide counseling program. Free online taxes To find the nearest AARP Tax-Aide site, visit AARP's website at www. Free online taxes aarp. Free online taxes org/money/taxaide or call 1-888-227-7669. Free online taxes For more information on these programs, go to IRS. Free online taxes gov and enter “VITA” in the search box. Free online taxes Internet. Free online taxes    IRS. Free online taxes gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Free online taxes Download the free IRS2Go app from the iTunes app store or from Google Play. Free online taxes Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Free online taxes Check the status of your 2013 refund with the Where's My Refund? application on IRS. Free online taxes gov or download the IRS2Go app and select the Refund Status option. Free online taxes The IRS issues more than 9 out of 10 refunds in less than 21 days. Free online taxes Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Free online taxes You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free online taxes The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free online taxes Use the Interactive Tax Assistant (ITA) to research your tax questions. Free online taxes No need to wait on the phone or stand in line. Free online taxes The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Free online taxes When you reach the response screen, you can print the entire interview and the final response for your records. Free online taxes New subject areas are added on a regular basis. Free online taxes  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Free online taxes gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Free online taxes You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Free online taxes The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Free online taxes When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Free online taxes Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Free online taxes You can also ask the IRS to mail a return or an account transcript to you. Free online taxes Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Free online taxes gov or by calling 1-800-908-9946. Free online taxes Tax return and tax account transcripts are generally available for the current year and the past three years. Free online taxes Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Free online taxes Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Free online taxes If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Free online taxes Check the status of your amended return using Where's My Amended Return? Go to IRS. Free online taxes gov and enter Where's My Amended Return? in the search box. Free online taxes You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free online taxes It can take up to 3 weeks from the date you mailed it to show up in our system. Free online taxes Make a payment using one of several safe and convenient electronic payment options available on IRS. Free online taxes gov. Free online taxes Select the Payment tab on the front page of IRS. Free online taxes gov for more information. Free online taxes Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Free online taxes Figure your income tax withholding with the IRS Withholding Calculator on IRS. Free online taxes gov. Free online taxes Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Free online taxes Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Free online taxes gov. Free online taxes Request an Electronic Filing PIN by going to IRS. Free online taxes gov and entering Electronic Filing PIN in the search box. Free online taxes Download forms, instructions and publications, including accessible versions for people with disabilities. Free online taxes Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Free online taxes gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Free online taxes An employee can answer questions about your tax account or help you set up a payment plan. Free online taxes Before you visit, check the Office Locator on IRS. Free online taxes gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Free online taxes If you have a special need, such as a disability, you can request an appointment. Free online taxes Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Free online taxes Apply for an Employer Identification Number (EIN). Free online taxes Go to IRS. Free online taxes gov and enter Apply for an EIN in the search box. Free online taxes Read the Internal Revenue Code, regulations, or other official guidance. Free online taxes Read Internal Revenue Bulletins. Free online taxes Sign up to receive local and national tax news and more by email. Free online taxes Just click on “subscriptions” above the search box on IRS. Free online taxes gov and choose from a variety of options. Free online taxes    Phone. Free online taxes You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Free online taxes Download the free IRS2Go app from the iTunes app store or from Google Play. Free online taxes Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Free online taxes gov, or download the IRS2Go app. Free online taxes Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Free online taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free online taxes Most VITA and TCE sites offer free electronic filing. Free online taxes Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Free online taxes Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Free online taxes Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Free online taxes If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Free online taxes The IRS issues more than 9 out of 10 refunds in less than 21 days. Free online taxes Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free online taxes Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Free online taxes The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free online taxes Note, the above information is for our automated hotline. Free online taxes Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Free online taxes Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Free online taxes You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free online taxes It can take up to 3 weeks from the date you mailed it to show up in our system. Free online taxes Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Free online taxes You should receive your order within 10 business days. Free online taxes Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Free online taxes If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Free online taxes Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Free online taxes The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Free online taxes These individuals can also contact the IRS through relay services such as the Federal Relay Service. Free online taxes    Walk-in. Free online taxes You can find a selection of forms, publications and services — in-person. Free online taxes Products. Free online taxes You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Free online taxes Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Free online taxes Services. Free online taxes You can walk in to your local TAC for face-to-face tax help. Free online taxes An employee can answer questions about your tax account or help you set up a payment plan. Free online taxes Before visiting, use the Office Locator tool on IRS. Free online taxes gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Free online taxes    Mail. Free online taxes You can send your order for forms, instructions, and publications to the address below. Free online taxes You should receive a response within 10 business days after your request is received. Free online taxes Internal Revenue Service 1201 N. Free online taxes Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Free online taxes The Taxpayer Advocate Service (TAS) is your voice at the IRS. Free online taxes Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Free online taxes   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Free online taxes We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Free online taxes You face (or your business is facing) an immediate threat of adverse action. Free online taxes You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Free online taxes   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Free online taxes Here's why we can help: TAS is an independent organization within the IRS. Free online taxes Our advocates know how to work with the IRS. Free online taxes Our services are free and tailored to meet your needs. Free online taxes We have offices in every state, the District of Columbia, and Puerto Rico. Free online taxes   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Free online taxes   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Free online taxes If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Free online taxes Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Free online taxes Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Free online taxes Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. Free online taxes Prev  Up  Next   Home   More Online Publications

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Free online taxes Publication 15-B - Main Content Table of Contents 1. Free online taxes Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. Free online taxes Fringe Benefit Exclusion RulesAccident and Health Benefits Achievement Awards Adoption Assistance Athletic Facilities De Minimis (Minimal) Benefits Dependent Care Assistance Educational Assistance Employee Discounts Employee Stock Options Employer-Provided Cell Phones Group-Term Life Insurance Coverage Health Savings Accounts Lodging on Your Business Premises Meals Moving Expense Reimbursements No-Additional-Cost Services Retirement Planning Services Transportation (Commuting) Benefits Tuition Reduction Working Condition Benefits 3. Free online taxes Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. Free online taxes Rules for Withholding, Depositing, and ReportingTransfer of property. Free online taxes Amount of deposit. Free online taxes Limitation. Free online taxes Conformity rules. Free online taxes Election not to withhold income tax. Free online taxes How To Get Tax Help 1. Free online taxes Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. Free online taxes For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. Free online taxes Performance of services. Free online taxes   A person who performs services for you does not have to be your employee. Free online taxes A person may perform services for you as an independent contractor, partner, or director. Free online taxes Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services. Free online taxes Provider of benefit. Free online taxes   You are the provider of a fringe benefit if it is provided for services performed for you. Free online taxes You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. Free online taxes For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care. Free online taxes Recipient of benefit. Free online taxes   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. Free online taxes That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. Free online taxes For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. Free online taxes Are Fringe Benefits Taxable? Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. Free online taxes Section 2 discusses the exclusions that apply to certain fringe benefits. Free online taxes Any benefit not excluded under the rules discussed in section 2 is taxable. Free online taxes Including taxable benefits in pay. Free online taxes   You must include in a recipient's pay the amount by which the value of a fringe benefit is more than the sum of the following amounts. Free online taxes Any amount the law excludes from pay. Free online taxes Any amount the recipient paid for the benefit. Free online taxes The rules used to determine the value of a fringe benefit are discussed in section 3. Free online taxes   If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. Free online taxes However, you can use special rules to withhold, deposit, and report the employment taxes. Free online taxes These rules are discussed in section 4. Free online taxes   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. Free online taxes However, you may have to report the benefit on one of the following information returns. Free online taxes If the recipient receives the benefit as: Use: An independent contractor Form 1099-MISC, Miscellaneous Income A partner Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free online taxes For more information, see the instructions for the forms listed above. Free online taxes Cafeteria Plans A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. Free online taxes If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. Free online taxes Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. Free online taxes However, a cafeteria plan can include a qualified 401(k) plan as a benefit. Free online taxes Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. Free online taxes Qualified benefits. Free online taxes   A cafeteria plan can include the following benefits discussed in section 2. Free online taxes Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). Free online taxes Adoption assistance. Free online taxes Dependent care assistance. Free online taxes Group-term life insurance coverage (including costs that cannot be excluded from wages). Free online taxes Health savings accounts (HSAs). Free online taxes Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. Free online taxes Benefits not allowed. Free online taxes   A cafeteria plan cannot include the following benefits discussed in section 2. Free online taxes Archer MSAs. Free online taxes See Accident and Health Benefits in section 2. Free online taxes Athletic facilities. Free online taxes De minimis (minimal) benefits. Free online taxes Educational assistance. Free online taxes Employee discounts. Free online taxes Employer-provided cell phones. Free online taxes Lodging on your business premises. Free online taxes Meals. Free online taxes Moving expense reimbursements. Free online taxes No-additional-cost services. Free online taxes Transportation (commuting) benefits. Free online taxes Tuition reduction. Free online taxes Working condition benefits. Free online taxes It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). Free online taxes $2,500 limit on a health flexible spending arrangement (FSA). Free online taxes   For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. Free online taxes For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. Free online taxes   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). Free online taxes While cafeteria plans generally must be amended on a prospective basis, an amendment that is adopted on or before December 31, 2014, may be made effective retroactively, provided that in operation the cafeteria plan meets the limit for plan years beginning after December 31, 2012. Free online taxes A cafeteria plan that does not limit health FSA contributions to the dollar limit is not a cafeteria plan and all benefits offered under the plan are includible in the employee's gross income. Free online taxes   For more information, see Notice 2012-40, 2012-26 I. Free online taxes R. Free online taxes B. Free online taxes 1046, available at www. Free online taxes irs. Free online taxes gov/irb/2012-26_IRB/ar09. Free online taxes html. Free online taxes Employee. Free online taxes   For these plans, treat the following individuals as employees. Free online taxes A current common-law employee. Free online taxes See section 2 in Publication 15 (Circular E) for more information. Free online taxes A full-time life insurance agent who is a current statutory employee. Free online taxes A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free online taxes Exception for S corporation shareholders. Free online taxes   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Free online taxes A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free online taxes Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Free online taxes Plans that favor highly compensated employees. Free online taxes   If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. Free online taxes A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. Free online taxes   A highly compensated employee for this purpose is any of the following employees. Free online taxes An officer. Free online taxes A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. Free online taxes An employee who is highly compensated based on the facts and circumstances. Free online taxes A spouse or dependent of a person described in (1), (2), or (3). Free online taxes Plans that favor key employees. Free online taxes   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. Free online taxes A plan favors key employees if more than 25% of the total of the nontaxable benefits you provide for all employees under the plan go to key employees. Free online taxes However, a plan you maintain under a collective bargaining agreement does not favor key employees. Free online taxes   A key employee during 2014 is generally an employee who is either of the following. Free online taxes An officer having annual pay of more than $170,000. Free online taxes An employee who for 2014 is either of the following. Free online taxes A 5% owner of your business. Free online taxes A 1% owner of your business whose annual pay was more than $150,000. Free online taxes Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. Free online taxes Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. Free online taxes Eligible employer. Free online taxes   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. Free online taxes If your business was not in existence throughout the preceding year, you are eligible if you reasonably expect to employ an average of 100 or fewer employees in the current year. Free online taxes If you establish a simple cafeteria plan in a year that you employ an average of 100 or fewer employees, you are considered an eligible employer for any subsequent year as long as you do not employ an average of 200 or more employees in a subsequent year. Free online taxes Eligibility and participation requirements. Free online taxes   These requirements are met if all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate and each employee eligible to participate in the plan may elect any benefit available under the plan. Free online taxes You may elect to exclude from the plan employees who: Are under age 21 before the close of the plan year, Have less than 1 year of service with you as of any day during the plan year, Are covered under a collective bargaining agreement, or Are nonresident aliens working outside the United States whose income did not come from a U. Free online taxes S. Free online taxes source. Free online taxes Contribution requirements. Free online taxes   You must make a contribution to provide qualified benefits on behalf of each qualified employee in an amount equal to: A uniform percentage (not less than 2%) of the employee’s compensation for the plan year, or An amount which is at least 6% of the employee’s compensation for the plan year or twice the amount of the salary reduction contributions of each qualified employee, whichever is less. Free online taxes If the contribution requirements are met using option (2), the rate of contribution to any salary reduction contribution of a highly compensated or key employee can not be greater than the rate of contribution to any other employee. Free online taxes More information. Free online taxes   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. Free online taxes 2. Free online taxes Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. Free online taxes These rules exclude all or part of the value of certain benefits from the recipient's pay. Free online taxes The excluded benefits are not subject to federal income tax withholding. Free online taxes Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2. Free online taxes This section discusses the exclusion rules for the following fringe benefits. Free online taxes Accident and health benefits. Free online taxes Achievement awards. Free online taxes Adoption assistance. Free online taxes Athletic facilities. Free online taxes De minimis (minimal) benefits. Free online taxes Dependent care assistance. Free online taxes Educational assistance. Free online taxes Employee discounts. Free online taxes Employee stock options. Free online taxes Employer-provided cell phones. Free online taxes Group-term life insurance coverage. Free online taxes Health savings accounts (HSAs). Free online taxes Lodging on your business premises. Free online taxes Meals. Free online taxes Moving expense reimbursements. Free online taxes No-additional-cost services. Free online taxes Retirement planning services. Free online taxes Transportation (commuting) benefits. Free online taxes Tuition reduction. Free online taxes Working condition benefits. Free online taxes See Table 2-1, later, for an overview of the employment tax treatment of these benefits. Free online taxes Table 2-1. Free online taxes Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. Free online taxes ) Treatment Under Employment Taxes Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal Unemployment (FUTA) Accident and health benefits Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement. Free online taxes Exempt, except for certain payments to S corporation employees who are 2% shareholders. Free online taxes Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). Free online taxes Adoption assistance Exempt1,3 Taxable Taxable Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children and the facility is operated by the employer on premises owned or leased by the employer. Free online taxes De minimis (minimal) benefits Exempt Exempt Exempt Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return). Free online taxes Educational assistance Exempt up to $5,250 of benefits each year. Free online taxes (See Educational Assistance , later in this section. Free online taxes ) Employee discounts Exempt3 up to certain limits. Free online taxes (See Employee Discounts , later in this section. Free online taxes ) Employee stock options See Employee Stock Options , later in this section. Free online taxes Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. Free online taxes Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. Free online taxes (Special rules apply to former employees. Free online taxes ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. Free online taxes (See Health Savings Accounts , later in this section. Free online taxes ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. Free online taxes Meals Exempt if furnished on your business premises for your convenience. Free online taxes Exempt if de minimis. Free online taxes Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. Free online taxes No-additional-cost services Exempt3 Exempt3 Exempt3 Retirement planning services Exempt5 Exempt5 Exempt5 Transportation (commuting) benefits Exempt1 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($130), qualified parking ($250), or qualified bicycle commuting reimbursement6 ($20). Free online taxes (See Transportation (Commuting) Benefits , later in this section. Free online taxes ) Exempt if de minimis. Free online taxes Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). Free online taxes Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. Free online taxes 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. Free online taxes 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. Free online taxes 4 Exemption does not apply to certain key employees under a plan that favors those employees. Free online taxes 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. Free online taxes 6 If the employee receives a qualified bicycle commuting reimbursement in a qualified bicycle commuting month, the employee cannot receive commuter highway vehicle, transit pass, or qualified parking benefits in that same month. Free online taxes 7 You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Free online taxes Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Free online taxes Also, show it in box 12 with code “C. Free online taxes ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Free online taxes Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. Free online taxes Contributions to the cost of accident or health insurance including qualified long-term care insurance. Free online taxes Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. Free online taxes Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). Free online taxes This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following. Free online taxes Payments or reimbursements of medical expenses. Free online taxes Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). Free online taxes The payments must be figured without regard to any period of absence from work. Free online taxes Accident or health plan. Free online taxes   This is an arrangement that provides benefits for your employees, their spouses, their dependents, and their children (under age 27) in the event of personal injury or sickness. Free online taxes The plan may be insured or noninsured and does not need to be in writing. Free online taxes Employee. Free online taxes   For this exclusion, treat the following individuals as employees. Free online taxes A current common-law employee. Free online taxes A full-time life insurance agent who is a current statutory employee. Free online taxes A retired employee. Free online taxes A former employee you maintain coverage for based on the employment relationship. Free online taxes A widow or widower of an individual who died while an employee. Free online taxes A widow or widower of a retired employee. Free online taxes For the exclusion of contributions to an accident or health plan, a leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free online taxes Special rule for certain government plans. Free online taxes   For certain government accident and health plans, payments to a deceased plan participant's beneficiary may qualify for the exclusion from gross income if the other requirements for exclusion are met. Free online taxes See section 105(j) for details. Free online taxes Exception for S corporation shareholders. Free online taxes   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Free online taxes A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free online taxes Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Free online taxes Exclusion from wages. Free online taxes   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. Free online taxes Exception for certain long-term care benefits. Free online taxes   You cannot exclude contributions to the cost of long-term care insurance from an employee's wages subject to federal income tax withholding if the coverage is provided through a flexible spending or similar arrangement. Free online taxes This is a benefit program that reimburses specified expenses up to a maximum amount that is reasonably available to the employee and is less than five times the total cost of the insurance. Free online taxes However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Free online taxes S corporation shareholders. Free online taxes   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the value of accident or health benefits you provide to the employee in the employee's wages subject to federal income tax withholding. Free online taxes However, you can exclude the value of these benefits (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. Free online taxes Exception for highly compensated employees. Free online taxes   If your plan is a self-insured medical reimbursement plan that favors highly compensated employees, you must include all or part of the amounts you pay to these employees in their wages subject to federal income tax withholding. Free online taxes However, you can exclude these amounts (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. Free online taxes   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. Free online taxes   A highly compensated employee for this exception is any of the following individuals. Free online taxes One of the five highest paid officers. Free online taxes An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. Free online taxes An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). Free online taxes   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. Free online taxes COBRA premiums. Free online taxes   The exclusion for accident and health benefits applies to amounts you pay to maintain medical coverage for a current or former employee under the Combined Omnibus Budget Reconciliation Act of 1986 (COBRA). Free online taxes The exclusion applies regardless of the length of employment, whether you directly pay the premiums or reimburse the former employee for premiums paid, and whether the employee's separation is permanent or temporary. Free online taxes Achievement Awards This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. Free online taxes The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. Free online taxes The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. Free online taxes Employee. Free online taxes   For this exclusion, treat the following individuals as employees. Free online taxes A current employee. Free online taxes A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. Free online taxes A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free online taxes Exception for S corporation shareholders. Free online taxes   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Free online taxes A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free online taxes Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Free online taxes Exclusion from wages. Free online taxes   You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. Free online taxes The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). Free online taxes See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. Free online taxes    To determine for 2014 whether an achievement award is a “qualified plan award” under the deduction rules described in Publication 535, treat any employee who received more than $115,000 in pay for 2013 as a highly compensated employee. Free online taxes   If the cost of awards given to an employee is more than your allowable deduction, include in the employee's wages the larger of the following amounts. Free online taxes The part of the cost that is more than your allowable deduction (up to the value of the awards). Free online taxes The amount by which the value of the awards exceeds your allowable deduction. Free online taxes Exclude the remaining value of the awards from the employee's wages. Free online taxes Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. Free online taxes It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. Free online taxes To determine whether your plan meets this test, do not consider employees excluded from your plan who are covered by a collective bargaining agreement, if there is evidence that adoption assistance was a subject of good-faith bargaining. Free online taxes It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). Free online taxes A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. Free online taxes You give reasonable notice of the plan to eligible employees. Free online taxes Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. Free online taxes For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Free online taxes The employee was a 5% owner at any time during the year or the preceding year. Free online taxes The employee received more than $115,000 in pay for the preceding year. Free online taxes You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Free online taxes You must exclude all payments or reimbursements you make under an adoption assistance program for an employee's qualified adoption expenses from the employee's wages subject to federal income tax withholding. Free online taxes However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Free online taxes For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. Free online taxes You must report all qualifying adoption expenses you paid or reimbursed under your adoption assistance program for each employee for the year in box 12 of the employee's Form W-2. Free online taxes Use code “T” to identify this amount. Free online taxes Exception for S corporation shareholders. Free online taxes   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Free online taxes A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free online taxes Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, including using the benefit as a reduction in distributions to the 2% shareholder. Free online taxes Athletic Facilities You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. Free online taxes For this purpose, an employee's dependent child is a child or stepchild who is the employee's dependent or who, if both parents are deceased, has not attained the age of 25. Free online taxes On-premises facility. Free online taxes   The athletic facility must be located on premises you own or lease. Free online taxes It does not have to be located on your business premises. Free online taxes However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. Free online taxes Employee. Free online taxes   For this exclusion, treat the following individuals as employees. Free online taxes A current employee. Free online taxes A former employee who retired or left on disability. Free online taxes A widow or widower of an individual who died while an employee. Free online taxes A widow or widower of a former employee who retired or left on disability. Free online taxes A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free online taxes A partner who performs services for a partnership. Free online taxes De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. Free online taxes A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. Free online taxes Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare. Free online taxes Examples of de minimis benefits include the following. Free online taxes Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. Free online taxes See Employer-Provided Cell Phones , later in this section, for details. Free online taxes Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes. Free online taxes Holiday gifts, other than cash, with a low fair market value. Free online taxes Group-term life insurance payable on the death of an employee's spouse or dependent if the face amount is not more than $2,000. Free online taxes Meals. Free online taxes See Meals , later in this section, for details. Free online taxes Occasional parties or picnics for employees and their guests. Free online taxes Occasional tickets for theater or sporting events. Free online taxes Transportation fare. Free online taxes See Transportation (Commuting) Benefits , later in this section, for details. Free online taxes Employee. Free online taxes   For this exclusion, treat any recipient of a de minimis benefit as an employee. Free online taxes Dependent Care Assistance This exclusion applies to household and dependent care services you directly or indirectly pay for or provide to an employee under a dependent care assistance program that covers only your employees. Free online taxes The services must be for a qualifying person's care and must be provided to allow the employee to work. Free online taxes These requirements are basically the same as the tests the employee would have to meet to claim the dependent care credit if the employee paid for the services. Free online taxes For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. Free online taxes Employee. Free online taxes   For this exclusion, treat the following individuals as employees. Free online taxes A current employee. Free online taxes A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free online taxes Yourself (if you are a sole proprietor). Free online taxes A partner who performs services for a partnership. Free online taxes Exclusion from wages. Free online taxes   You can exclude the value of benefits you provide to an employee under a dependent care assistance program from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income. Free online taxes   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. Free online taxes This limit is reduced to $2,500 for married employees filing separate returns. Free online taxes   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. Free online taxes Special rules apply to determine the earned income of a spouse who is either a student or not able to care for himself or herself. Free online taxes For more information on the earned income limit, see Publication 503. Free online taxes Exception for highly compensated employees. Free online taxes   You cannot exclude dependent care assistance from the wages of a highly compensated employee unless the benefits provided under the program do not favor highly compensated employees and the program meets the requirements described in section 129(d) of the Internal Revenue Code. Free online taxes   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Free online taxes The employee was a 5% owner at any time during the year or the preceding year. Free online taxes The employee received more than $115,000 in pay for the preceding year. Free online taxes You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Free online taxes Form W-2. Free online taxes   Report the value of all dependent care assistance you provide to an employee under a dependent care assistance program in box 10 of the employee's Form W-2. Free online taxes Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. Free online taxes Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. Free online taxes Example. Free online taxes   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. Free online taxes In addition, it provides occasional on-site dependent care to its employees at no cost. Free online taxes Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. Free online taxes In addition, Emily used the on-site dependent care several times. Free online taxes The fair market value of the on-site care was $700. Free online taxes Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). Free online taxes Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount. Free online taxes Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. Free online taxes The exclusion also applies to graduate level courses. Free online taxes Educational assistance means amounts you pay or incur for your employees' education expenses. Free online taxes These expenses generally include the cost of books, equipment, fees, supplies, and tuition. Free online taxes However, these expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education: Has a reasonable relationship to your business, or Is required as part of a degree program. Free online taxes Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. Free online taxes Nor do they include the cost of lodging, meals, or transportation. Free online taxes Educational assistance program. Free online taxes   An educational assistance program is a separate written plan that provides educational assistance only to your employees. Free online taxes The program qualifies only if all of the following tests are met. Free online taxes The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. Free online taxes To determine whether your program meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. Free online taxes The program does not provide more than 5% of its benefits during the year for shareholders or owners. Free online taxes A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. Free online taxes The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. Free online taxes You give reasonable notice of the program to eligible employees. Free online taxes Your program can cover former employees if their employment is the reason for the coverage. Free online taxes   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Free online taxes The employee was a 5% owner at any time during the year or the preceding year. Free online taxes The employee received more than $115,000 in pay for the preceding year. Free online taxes You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Free online taxes Employee. Free online taxes   For this exclusion, treat the following individuals as employees. Free online taxes A current employee. Free online taxes A former employee who retired, left on disability, or was laid off. Free online taxes A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free online taxes Yourself (if you are a sole proprietor). Free online taxes A partner who performs services for a partnership. Free online taxes Exclusion from wages. Free online taxes   You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. Free online taxes Assistance over $5,250. Free online taxes   If you do not have an educational assistance plan, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. Free online taxes Working condition benefits may be excluded from wages. Free online taxes Property or a service provided is a working condition benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. Free online taxes See Working Condition Benefits , later, in this section. Free online taxes Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. Free online taxes However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). Free online taxes Employee. Free online taxes   For this exclusion, treat the following individuals as employees. Free online taxes A current employee. Free online taxes A former employee who retired or left on disability. Free online taxes A widow or widower of an individual who died while an employee. Free online taxes A widow or widower of an employee who retired or left on disability. Free online taxes A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Free online taxes A partner who performs services for a partnership. Free online taxes Exclusion from wages. Free online taxes   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. Free online taxes For a discount on services, 20% of the price you charge nonemployee customers for the service. Free online taxes For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. Free online taxes   Determine your gross profit percentage in the line of business based on all property you offer to customers (including employee customers) and your experience during the tax year immediately before the tax year in which the discount is available. Free online taxes To figure your gross profit percentage, subtract the total cost of the property from the total sales price of the property and divide the result by the total sales price of the property. Free online taxes Exception for highly compensated employees. Free online taxes   You cannot exclude from the wages of a highly compensated employee any part of the value of a discount that is not available on the same terms to one of the following groups. Free online taxes All of your employees. Free online taxes A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. Free online taxes   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Free online taxes The employee was a 5% owner at any time during the year or the preceding year. Free online taxes The employee received more than $115,000 in pay for the preceding year. Free online taxes You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Free online taxes Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. Free online taxes Wages for social security, Medicare, and federal unemployment (FUTA) taxes do not include remuneration resulting from the exercise, after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or from any disposition of stock acquired by exercising such an option. Free online taxes The IRS will not apply these taxes to an exercise before October 23, 2004, of an incentive stock option or an employee stock purchase plan option or to a disposition of stock acquired by such exercise. Free online taxes Additionally, federal income tax withholding is not required on the income resulting from a disqualifying disposition of stock acquired by the exercise after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or on income equal to the discount portion of stock acquired by the exercise, after October 22, 2004, of an employee stock purchase plan option resulting from any disposition of the stock. Free online taxes The IRS will not apply federal income tax withholding upon the disposition of stock acquired by the exercise, before October 23, 2004, of an incentive stock option or an employee stock purchase plan option. Free online taxes However, the employer must report as income in box 1 of Form W-2, (a) the discount portion of stock acquired by the exercise of an employee stock purchase plan option upon disposition of the stock, and (b) the spread (between the exercise price and the fair market value of the stock at the time of exercise) upon a disqualifying disposition of stock acquired by the exercise of an incentive stock option or an employee stock purchase plan option. Free online taxes An employer must report the excess of the fair market value of stock received upon exercise of a nonstatutory stock option over the amount paid for the stock option on Form W-2 in boxes 1, 3 (up to the social security wage base), 5, and in box 12 using the code “V. Free online taxes ” See Regulations section 1. Free online taxes 83-7. Free online taxes An employee who transfers his or her interest in nonstatutory stock options to the employee's former spouse incident to a divorce is not required to include an amount in gross income upon the transfer. Free online taxes The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. Free online taxes See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. Free online taxes You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. Free online taxes irs. Free online taxes gov/pub/irs-irbs/irb02-19. Free online taxes pdf. Free online taxes See Revenue Ruling 2004-60, 2004-24 I. Free online taxes R. Free online taxes B. Free online taxes 1051, available at www. Free online taxes irs. Free online taxes gov/irb/2004-24_IRB/ar13. Free online taxes html. Free online taxes For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. Free online taxes Employer-Provided Cell Phones The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. Free online taxes Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit. Free online taxes For the rules relating to these types of benefits, see De Minimis (Minimal) Benefits , earlier in this section, and Working Condition Benefits , later in this section. Free online taxes Noncompensatory business purposes. Free online taxes   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. Free online taxes Examples of substantial business reasons include the employer's: Need to contact the employee at all times for work-related emergencies, Requirement that the employee be available to speak with clients at times when the employee is away from the office, and Need to speak with clients located in other time zones at times outside the employee's normal workday. Free online taxes Cell phones provided to promote goodwill, boost morale, or attract prospective employees. Free online taxes   You cannot exclude from an employee's wages the value of a cell phone provided to promote goodwill of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee. Free online taxes Additional information. Free online taxes   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. Free online taxes R. Free online taxes B. Free online taxes 407, available at  www. Free online taxes irs. Free online taxes gov/irb/2011-38_IRB/ar07. Free online taxes html. Free online taxes Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. Free online taxes It provides a general death benefit that is not included in income. Free online taxes You provide it to a group of employees. Free online taxes See The 10-employee rule , later. Free online taxes It provides an amount of insurance to each employee based on a formula that prevents individual selection. Free online taxes This formula must use factors such as the employee's age, years of service, pay, or position. Free online taxes You provide it under a policy you directly or indirectly carry. Free online taxes Even if you do not pay any of the policy's cost, you are considered to carry it if you arrange for payment of its cost by your employees and charge at least one employee less than, and at least one other employee more than, the cost of his or her insurance. Free online taxes Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. Free online taxes Group-term life insurance does not include the following insurance. Free online taxes Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. Free online taxes Life insurance on the life of your employee's spouse or dependent. Free online taxes However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. Free online taxes See De Minimis (Minimal) Benefits , earlier in this section. Free online taxes Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met. Free online taxes See Regulations section 1. Free online taxes 79-1 for details. Free online taxes Employee. Free online taxes   For this exclusion, treat the following individuals as employees. Free online taxes A current common-law employee. Free online taxes A full-time life insurance agent who is a current statutory employee. Free online taxes An individual who was formerly your employee under (1) or (2). Free online taxes A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction and control. Free online taxes Exception for S corporation shareholders. Free online taxes   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Free online taxes A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free online taxes Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Free online taxes The 10-employee rule. Free online taxes   Generally, life insurance is not group-term life insurance unless you provide it to at least 10 full-time employees at some time during the year. Free online taxes   For this rule, count employees who choose not to receive the insurance unless, to receive it, they must contribute to the cost of benefits other than the group-term life insurance. Free online taxes For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. Free online taxes However, do not count an employee who must pay part or all of the cost of permanent benefits to get insurance, unless that employee chooses to receive it. Free online taxes A permanent benefit is an economic value extending beyond one policy year (for example, a paid-up or cash-surrender value) that is provided under a life insurance policy. Free online taxes Exceptions. Free online taxes   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. Free online taxes   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. Free online taxes If evidence that the employee is insurable is required, it is limited to a medical questionnaire (completed by the employee) that does not require a physical. Free online taxes You provide the insurance to all your full-time employees or, if the insurer requires the evidence mentioned in (1), to all full-time employees who provide evidence the insurer accepts. Free online taxes You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. Free online taxes See Regulations section 1. Free online taxes 79-1 for details. Free online taxes   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. Free online taxes You provide the insurance under a common plan covering your employees and the employees of at least one other employer who is not related to you. Free online taxes The insurance is restricted to, but mandatory for, all your employees who belong to, or are represented by, an organization (such as a union) that carries on substantial activities besides obtaining insurance. Free online taxes Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. Free online taxes   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. Free online taxes They were 65 or older. Free online taxes They customarily work 20 hours or less a week or 5 months or less in a calendar year. Free online taxes They have not been employed for the waiting period given in the policy. Free online taxes This waiting period cannot be more than 6 months. Free online taxes Exclusion from wages. Free online taxes   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. Free online taxes You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. Free online taxes In addition, you do not have to withhold federal income tax or pay FUTA tax on any group-term life insurance you provide to an employee. Free online taxes Coverage over the limit. Free online taxes   You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Free online taxes Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Free online taxes Also, show it in box 12 with code “C. Free online taxes ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Free online taxes   Figure the monthly cost of the insurance to include in the employee's wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in Table 2-2. Free online taxes For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. Free online taxes You must prorate the cost from the table if less than a full month of coverage is involved. Free online taxes Table 2-2. Free online taxes Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . Free online taxes 05 25 through 29 . Free online taxes 06 30 through 34 . Free online taxes 08 35 through 39 . Free online taxes 09 40 through 44 . Free online taxes 10 45 through 49 . Free online taxes 15 50 through 54 . Free online taxes 23 55 through 59 . Free online taxes 43 60 through 64 . Free online taxes 66 65 through 69 1. Free online taxes 27 70 and older 2. Free online taxes 06 You figure the total cost to include in the employee's wages by multiplying the monthly cost by the number of full months' coverage at that cost. Free online taxes Example. Free online taxes Tom's employer provides him with group-term life insurance coverage of $200,000. Free online taxes Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. Free online taxes Tom's employer must include $170 in his wages. Free online taxes The $200,000 of insurance coverage is reduced by $50,000. Free online taxes The yearly cost of $150,000 of coverage is $270 ($. Free online taxes 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. Free online taxes The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. Free online taxes The employer also enters $170 in box 12 with code “C. Free online taxes ” Coverage for dependents. Free online taxes   Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount is not more than $2,000. Free online taxes If the face amount is greater than $2,000, the entire cost of the dependent coverage must be included in income unless the amount over $2,000 is purchased with employee contributions on an after-tax basis. Free online taxes The cost of the insurance is determined by using Table 2-2. Free online taxes Former employees. Free online taxes   When group-term life insurance over $50,000 is provided to an employee (including retirees) after his or her termination, the employee share of social security and Medicare taxes on that period of coverage is paid by the former employee with his or her tax return and is not collected by the employer. Free online taxes You are not required to collect those taxes. Free online taxes Use the table above to determine the amount of social security and Medicare taxes owed by the former employee for coverage provided after separation from service. Free online taxes Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. Free online taxes ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. Free online taxes Exception for key employees. Free online taxes   Generally, if your group-term life insurance plan favors key employees as to participation or benefits, you must include the entire cost of the insurance in your key employees' wages. Free online taxes This exception generally does not apply to church plans. Free online taxes When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. Free online taxes Include the cost in boxes 1, 3, and 5 of Form W-2. Free online taxes However, you do not have to withhold federal income tax or pay FUTA tax on the cost of any group-term life insurance you provide to an employee. Free online taxes   For this purpose, the cost of the insurance is the greater of the following amounts. Free online taxes The premiums you pay for the employee's insurance. Free online taxes See Regulations section 1. Free online taxes 79-4T(Q&A 6) for more information. Free online taxes The cost you figure using Table 2-2. Free online taxes   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. Free online taxes See section 416(i) of the Internal Revenue Code for more information. Free online taxes An officer having annual pay of more than $170,000. Free online taxes An individual who for 2014 was either of the following. Free online taxes A 5% owner of your business. Free online taxes A 1% owner of your business whose annual pay was more than $150,000. Free online taxes   A former employee who was a key employee upon retirement or separation from service is also a key employee. Free online taxes   Your plan does not favor key employees as to participation if at least one of the following is true. Free online taxes It benefits at least 70% of your employees. Free online taxes At least 85% of the participating employees are not key employees. Free online taxes It benefits employees who qualify under a set of rules you set up that do not favor key employees. Free online taxes   Your plan meets this participation test if it is part of a cafeteria plan (discussed in section 1) and it meets the participation test for those plans. Free online taxes   When applying this test, do not consider employees who: Have not completed 3 years of service, Are part-time or seasonal, Are nonresident aliens who receive no U. Free online taxes S. Free online taxes source earned income from you, or Are not included in the plan but are in a unit of employees covered by a collective bargaining agreement, if the benefits provided under the plan were the subject of good-faith bargaining between you and employee representatives. Free online taxes   Your plan does not favor key employees as to benefits if all benefits available to participating key employees are also available to all other participating employees. Free online taxes Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. Free online taxes S corporation shareholders. Free online taxes   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the cost of all group-term life insurance coverage you provide the 2% shareholder in his or her wages. Free online taxes When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. Free online taxes Include the cost in boxes 1, 3, and 5 of Form W-2. Free online taxes However, you do not have to withhold federal income tax or pay federal unemployment tax on the cost of any group-term life insurance coverage you provide to the 2% shareholder. Free online taxes Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. Free online taxes Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. Free online taxes Contributions to the account are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. Free online taxes The medical expenses must not be reimbursable by insurance or other sources and their payment from HSA funds (distribution) will not give rise to a medical expense deduction on the individual's federal income tax return. Free online taxes For more information about HSAs, visit the Department of Treasury's website at www. Free online taxes treasury. Free online taxes gov and enter “HSA” in the search box. Free online taxes Eligibility. Free online taxes   A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance except for permitted insurance listed under section 223(c)(3) or insurance for accidents, disability, dental care, vision care, or long-term care. Free online taxes For calendar year 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage and $12,700 for family coverage. Free online taxes   There are no income limits that restrict an individual's eligibility to contribute to an HSA nor is there a requirement that the account owner have earned income to make a contribution. Free online taxes Exceptions. Free online taxes   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. Free online taxes Also, an employee's participation in a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) generally disqualifies the individual (and employer) from making contributions to his or her HSA. Free online taxes However, an individual may qualify to participate in an HSA if he or she is participating in only a limited-purpose FSA or HRA or a post-deductible FSA. Free online taxes For more information, see Other employee health plans in Publication 969. Free online taxes Employer contributions. Free online taxes   Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. Free online taxes For 2014, you can contribute up to $3,300 for self-only coverage or $6,550 for family coverage to a qualified individual's HSA. Free online taxes   The contribution amounts listed above are increased by $1,000 for a qualified individual who is age 55 or older at any time during the year. Free online taxes For two qualified individuals who are married to each other and who each are age 55 or older at any time during the year, each spouse's contribution limit is increased by $1,000 provided each spouse has a separate HSA. Free online taxes No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. Free online taxes Nondiscrimination rules. Free online taxes    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. Free online taxes Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. Free online taxes   For guidance on employer comparable contributions to HSAs under section 4980G in instances where an employee has not established an HSA by December 31 and in instances where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses, see Regulations section 54. Free online taxes 4980G-4. Free online taxes Exception. Free online taxes   The Tax Relief and Health Care Act of 2006 allows employers to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee. Free online taxes A highly compensated employee for 2014 is an employee who meets either of the following tests. Free online taxes The employee was a 5% owner at any time during the year or the preceding year. Free online taxes The employee received more than $115,000 in pay for the preceding year. Free online taxes You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Free online taxes Partnerships and S corporations. Free online taxes   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. Free online taxes Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances. Free online taxes Cafeteria plans. Free online taxes   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. Free online taxes However, cafeteria plan nondiscrimination rules still apply. Free online taxes For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. Free online taxes Contributions that favor lower-paid employees are not prohibited. Free online taxes Reporting requirements. Free online taxes   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. Free online taxes ” The trustee or custodian of the HSA, generally a bank or insurance company, reports distributions from the HSA using Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Free online taxes Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. Free online taxes It is furnished on your business premises. Free online taxes It is furnished for your convenience. Free online taxes The employee must accept it as a condition of employment. Free online taxes Different tests may apply to lodging furnished by educational institutions. Free online taxes See section 119(d) of the Internal Revenue Code for details. Free online taxes The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. Free online taxes On your business premises. Free online taxes   For this exclusion, your business premises is generally your employee's place of work. Free online taxes For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. Free online taxes For your convenience. Free online taxes   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. Free online taxes You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. Free online taxes This is true even if a law or an employment contract provides that the lodging is furnished as pay. Free online taxes However, a written statement that the lodging is furnished for your convenience is not sufficient. Free online taxes Condition of employment. Free online taxes   Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. Free online taxes Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. Free online taxes   It does not matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. Free online taxes Example. Free online taxes A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. Free online taxes If Joan chooses to live at the hospital, the hospital cannot exclude the value of the lodging from her wages because she is not required to live at the hospital to properly perform the duties of her employment. Free online taxes S corporation shareholders. Free online taxes   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Free online taxes A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Free online taxes Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Free online taxes Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. Free online taxes De Minimis Meals You can exclude any occasional meal or meal money you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. Free online taxes The exclusion applies, for example, to the following items. Free online taxes Coffee, doughnuts, or soft drinks. Free online taxes Occasional meals or meal money provided to enable an employee to work overtime. Free online taxes However, the exclusion does not apply to meal money figured on the basis of hours worked. Free online taxes Occasional parties or picnics for employees and their guests. Free online taxes This exclusion also applies to meals you provide at an employer-operated eating facility for employees if the annual revenue from the facility equals or exceeds the direct costs of the facility. Free online taxes For this purpose, your revenue from providing a meal is considered equal to the facility's direct operating costs to provide that meal if its value can be excluded from an employee's wages as explained under Meals on Your Business Premises , later. Free online taxes If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. Free online taxes The 50% limit on deductions for the cost of meals does not apply. Free online taxes The deduction limit on meals is discussed in chapter 2 of Publication 535. Free online taxes Employee. Free online taxes   For this exclusion, treat any recipient of a de minimis meal as