Internal Revenue Service (IRS) Publication 15-B, "Employer’s Tax Guide to Fringe Benefits," contains information for employers on the employment tax treatment of fringe benefits. Included in the guide are changes for 2016 that employers need to be aware of and important reminders. Publication 15-B is a great resource for all employers.
Standard Business Mileage Rate
The business mileage rate for 2016 is 54 cents per mile down from the 2015 rate of 57.5 cents. Use this new rate to reimburse employees for business use of a personal vehicle or a vehicle (including vans, pickups, or panel trucks) provided to an employee under certain conditions. For more information, see "Cents-Per-Mile Rule" on page 22.
Retroactive Increase in Excludable Transit Benefits
WageWorks’ Alert "Federal Spending Bill Suspends Some Affordable Care Taxes" brought you the good news about permanent parking and transit parity and the retroactive increase in the 2015 monthly transit limit to $250.
The Protecting Americans from Tax Hikes (PATH) Act provided for permanent parity of monthly limits for transit passes and commuter highway vehicle transportation, so that it matches the maximum monthly amount for qualified parking benefits; which was $250 for 2015. The parity for transit expenses applies retroactively for participating employees beginning January 1, 2015 thru December 31, 2015.
The IRS provided employer instructions on how to correct the social security and Medicare taxes on the 2015 excess transit benefits. See "Application of Retroactive Increase in Excludible Transit Benefits, IRS Notice 2016-6" for a rundown of processes and forms handling.
For 2016, the monthly limit excluded from an employee’s income on a pre-tax basis for parking or transit is $255. For more information see "Qualified Transportation Benefits" on page 19 of IRS Publication 15-B.
Qualified Parking Exclusion
For 2016, the monthly exclusion for qualified parking is $255.
Contribution Limit on Health FSA
Under Revenue Procedure 2015-53, the IRS announced the 2016 healthcare FSA pre-tax plan year deduction limit will remain at $2,550, the same as in 2015. For more information see "Cafeteria Plans" on page 3 of IRS Publication 15-B.
It’s free and informative. Everything from accident and health benefits to W-2 reporting of fringe benefits, and how to get tax help are included in this publication for employers.
Services Provided to Data Breach Victims
Something not mentioned in Publication 15-B is in response to data breaches. The IRS’s "Announcement 2015-22" assures individuals that the value of identity protection services provided, after a breach is discovered, are not included in individuals’ gross incomes.
Announcement 2016-02, released by the IRS on December 20, 2015, expanded on the previous Announcement. The value of identity protection services, provided to individuals not compromised by a data breach, also are not included in individual’s gross incomes.
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