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2012 1040ez Tax Form

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2012 1040ez Tax Form

2012 1040ez tax form 9. 2012 1040ez tax form   Worksheets Table of Contents When Should I Figure MAC?Checking the Previous Year's Contributions Available Worksheets Chapter 2 introduced you to the term maximum amount contributable (MAC). 2012 1040ez tax form Generally, your MAC is the lesser of your: Limit on annual additions (chapter 3), or Limit on elective deferrals (chapter 4). 2012 1040ez tax form The worksheets in this chapter can help you figure the cost of incidental life insurance, your includible compensation, your limit on annual additions, your limit on elective deferrals, your limit on catch-up contributions, and your MAC. 2012 1040ez tax form After completing the worksheets, you should maintain them with your 403(b) records for that year. 2012 1040ez tax form Do not attach them to your tax return. 2012 1040ez tax form At the end of the year or the beginning of the next year, you should compare your estimated compensation figures with your actual figures. 2012 1040ez tax form If your compensation is the same as, or more than, the projected amounts and the calculations are correct, then you should simply file these worksheets with your other tax records for the year. 2012 1040ez tax form If your compensation was lower than your estimated figures, you will need to check the amount contributed during the year to determine if contributions are more than your MAC. 2012 1040ez tax form When Should I Figure MAC? At the beginning of each year, you should figure your MAC using a conservative estimate of your compensation. 2012 1040ez tax form Should your income change during the year, you should refigure your MAC based on a revised conservative estimate. 2012 1040ez tax form By doing this, you will be able to determine if contributions to your 403(b) account should be increased or decreased for the year. 2012 1040ez tax form Checking the Previous Year's Contributions At the beginning of the following year, you should refigure your MAC based on your actual earned income. 2012 1040ez tax form At the end of the current year or the beginning of the next year, you should check your contributions to be sure you did not exceed your MAC. 2012 1040ez tax form This means refiguring your limit based on your actual compensation figures for the year. 2012 1040ez tax form This will allow you to determine if the amount contributed is more than the allowable amounts, and possibly avoid additional taxes. 2012 1040ez tax form Available Worksheets The following worksheets have been provided to help you figure your MAC. 2012 1040ez tax form Worksheet A. 2012 1040ez tax form Cost of Incidental Life Insurance. 2012 1040ez tax form Worksheet B. 2012 1040ez tax form Includible Compensation for Your Most Recent Year of Service Worksheet C. 2012 1040ez tax form Limit on Catch-Up Contributions. 2012 1040ez tax form ??? Worksheet 1. 2012 1040ez tax form Maximum Amount Contributable (MAC). 2012 1040ez tax form Worksheet A. 2012 1040ez tax form Cost of Incidental Life Insurance Note. 2012 1040ez tax form Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. 2012 1040ez tax form This amount will be used to figure includible compensation for your most recent year of service. 2012 1040ez tax form 1. 2012 1040ez tax form Enter the value of the contract (amount payable upon your death) 1. 2012 1040ez tax form   2. 2012 1040ez tax form Enter the cash value in the contract at the end of the year 2. 2012 1040ez tax form   3. 2012 1040ez tax form Subtract line 2 from line 1. 2012 1040ez tax form This is the value of your current life insurance protection 3. 2012 1040ez tax form   4. 2012 1040ez tax form Enter your age on your birthday nearest the beginning of the policy year 4. 2012 1040ez tax form   5. 2012 1040ez tax form Enter the 1-year term premium for $1,000 of life insurance based on your age. 2012 1040ez tax form (From Figure 3-1) 5. 2012 1040ez tax form   6. 2012 1040ez tax form Divide line 3 by $1,000 6. 2012 1040ez tax form   7. 2012 1040ez tax form Multiply line 6 by line 5. 2012 1040ez tax form This is the cost of your incidental life insurance 7. 2012 1040ez tax form   Worksheet B. 2012 1040ez tax form Includible Compensation for Your Most Recent Year of Service1 Note. 2012 1040ez tax form Use this worksheet to figure includible compensation for your most recent year of service. 2012 1040ez tax form 1. 2012 1040ez tax form Enter your includible wages from the employer maintaining your 403(b) account for your most recent year of service 1. 2012 1040ez tax form   2. 2012 1040ez tax form Enter elective deferrals excluded from your gross income for your most recent year of service2 2. 2012 1040ez tax form   3. 2012 1040ez tax form Enter amounts contributed or deferred by your employer under a cafeteria plan for your most recent year of service 3. 2012 1040ez tax form   4. 2012 1040ez tax form Enter amounts contributed or deferred by your employer according to your election to your 457 account (a nonqualified plan of a state or local government or of a tax-exempt organization) for your most recent year of service 4. 2012 1040ez tax form   5. 2012 1040ez tax form Enter pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan for your most recent year of service 5. 2012 1040ez tax form   6. 2012 1040ez tax form Enter your foreign earned income exclusion for your most recent year of service 6. 2012 1040ez tax form   7. 2012 1040ez tax form Add lines 1, 2, 3, 4, 5, and 6 7. 2012 1040ez tax form   8. 2012 1040ez tax form Enter the cost of incidental life insurance that is part of your annuity contract for your most recent year of service 8. 2012 1040ez tax form   9. 2012 1040ez tax form Enter compensation that was both: Earned during your most recent year of service, and Earned while your employer was not qualified to maintain a 403(b) plan 9. 2012 1040ez tax form   10. 2012 1040ez tax form Add lines 8 and 9 10. 2012 1040ez tax form   11. 2012 1040ez tax form Subtract line 10 from line 7. 2012 1040ez tax form This is your includible compensation for your most recent year of service 11. 2012 1040ez tax form   1Use estimated amounts if figuring includible compensation before the end of the year. 2012 1040ez tax form  2Elective deferrals made to a designated Roth account are not excluded from your gross income and should not be included on this line. 2012 1040ez tax form Worksheet C. 2012 1040ez tax form Limit on Catch-Up Contributions Note. 2012 1040ez tax form If you will be age 50 or older by the end of the year, use this worksheet to figure your limit on catch-up contributions. 2012 1040ez tax form 1. 2012 1040ez tax form Maximum catch-up contributions 1. 2012 1040ez tax form $5,500 2. 2012 1040ez tax form Enter your includible compensation for your most recent year of service 2. 2012 1040ez tax form   3. 2012 1040ez tax form Enter your elective deferrals 3. 2012 1040ez tax form   4. 2012 1040ez tax form Subtract line 3 from line 2 4. 2012 1040ez tax form   5. 2012 1040ez tax form Enter the lesser of line 1 or line 4. 2012 1040ez tax form This is your limit on catch-up contributions 5. 2012 1040ez tax form   Worksheet 1. 2012 1040ez tax form Maximum Amount Contributable (MAC) Note. 2012 1040ez tax form Use this worksheet to figure your MAC. 2012 1040ez tax form Part I. 2012 1040ez tax form Limit on Annual Additions     1. 2012 1040ez tax form Enter your includible compensation for your most recent year of service 1. 2012 1040ez tax form   2. 2012 1040ez tax form Maximum1: For 2013, enter $51,000 For 2014, enter $52,000 2. 2012 1040ez tax form   3. 2012 1040ez tax form Enter the lesser of line 1 or line 2. 2012 1040ez tax form This is your limit on annual additions 3. 2012 1040ez tax form     Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. 2012 1040ez tax form     Part II. 2012 1040ez tax form Limit on Elective Deferrals     4. 2012 1040ez tax form Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. 2012 1040ez tax form     Note. 2012 1040ez tax form If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. 2012 1040ez tax form If not, enter zero (-0-) on line 16 and go to line 17. 2012 1040ez tax form     5. 2012 1040ez tax form Amount per year of service 5. 2012 1040ez tax form $ 5,000 6. 2012 1040ez tax form Enter your years of service 6. 2012 1040ez tax form   7. 2012 1040ez tax form Multiply line 5 by line 6 7. 2012 1040ez tax form   8. 2012 1040ez tax form Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. 2012 1040ez tax form   9. 2012 1040ez tax form Subtract line 8 from line 7. 2012 1040ez tax form If zero or less, enter zero (-0-) 9. 2012 1040ez tax form   10. 2012 1040ez tax form Maximum increase in limit for long service 10. 2012 1040ez tax form $15,000 11. 2012 1040ez tax form Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. 2012 1040ez tax form   12. 2012 1040ez tax form Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. 2012 1040ez tax form   13. 2012 1040ez tax form Add line 11 and line 12 13. 2012 1040ez tax form   14. 2012 1040ez tax form Subtract line 13 from line 10 14. 2012 1040ez tax form   15. 2012 1040ez tax form Maximum additional contributions 15. 2012 1040ez tax form $ 3,000 16. 2012 1040ez tax form Enter the least of lines 9, 14, or 15. 2012 1040ez tax form This is your increase in the limit for long service 16. 2012 1040ez tax form   17. 2012 1040ez tax form Add lines 4 and 16. 2012 1040ez tax form This is your limit on elective deferrals 17. 2012 1040ez tax form     Part III. 2012 1040ez tax form Maximum Amount Contributable     18. 2012 1040ez tax form If you had only nonelective contributions, enter the amount from line 3. 2012 1040ez tax form This is your MAC. 2012 1040ez tax form    If you had only elective deferrals, enter the lesser of lines 3 or 17. 2012 1040ez tax form This is your MAC. 2012 1040ez tax form    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. 2012 1040ez tax form This is your MAC. 2012 1040ez tax form (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. 2012 1040ez tax form ) 18. 2012 1040ez tax form   1If you participate in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pension plans of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. 2012 1040ez tax form You must also combine the contributions made to all 403(b) accounts on your behalf by your employer. 2012 1040ez tax form Prev  Up  Next   Home   More Online Publications
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Understanding your CP14I Notice

You owe taxes and penalties because you didn't take out the minimum amount you had to from your traditional individual retirement arrangement (IRA). Or, you put into a tax-sheltered account more than you can legally.


What you need to do

  • Read your notice carefully — it'll explain how much you owe and how to pay it.
  • Pay the amount you owe by the date the notice asks.
  • Make a payment plan if you can't pay the full amount you owe.
  • Contact us if you disagree.

You may want to...


Answers to Common Questions

What is a traditional individual retirement arrangement (IRA)?
A traditional IRA is a retirement savings plan where the amount you put in is tax-deductable. The money you put in is usually not taxed until you take it out. A traditional IRA is not a Roth IRA or a SIMPLE IRA.

What is a Roth IRA?
A Roth IRA is a retirement plan where the amount you put in is taxable. But what the amount earns and what you take out is not taxable.

What is a SIMPLE IRA?
A SIMPLE IRA is a retirement plan sponsored by your employer. You put part of your pay into it. Your employer matches a certain amount of what you put in. You don't pay tax on what you and your employer put in until you take it out.

How much do I have to take out from my traditional IRA?
You must take out a minimum amount from your IRA starting at age 70½. The amount you have to take out is based on your life expectancy. Publication 590, Individual Retirement Arrangements (IRAs) has a life expectancy chart. You divide the money in your account by the years of your life expectancy. The result is the minimum amount you must take out. You don't have to take out a minimum amount from Roth IRAs.

Are there different types of tax-sheltered accounts?
The different types of tax-sheltered accounts, besides retirement accounts, could include saving accounts for educational or medical expenses.

What is the maximum amount I can contribute to a tax-sheltered account?
The maximum amount depends on the type of account.

What happens if I can't pay what I owe?
You can make a payment plan if you can’t pay the full amount you owe.

How can I make a payment plan?
Call us at the toll free number on the top right corner of your notice to talk about payment plans or learn more about them.

What should I do if I disagree with the notice?
Call us at the toll free number on the top right corner of your notice. Please have your paperwork (such as cancelled checks, amended return, etc.) ready when you call.

Am I charged interest on the money I owe?
Not if you pay the full amount you owe by the date on the payment coupon. However, interest adds up on the unpaid amount after that date.

Will I receive a penalty if I can't pay the full amount?
Yes, you'll receive a late payment penalty. Call us at the number on your notice if you can't pay the full amount because of financial problems. We may be able to remove the penalty.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 

Page Last Reviewed or Updated: 14-Mar-2014

The 2012 1040ez Tax Form

2012 1040ez tax form Publication 15-B - Main Content Table of Contents 1. 2012 1040ez tax form Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. 2012 1040ez tax form 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. 2012 1040ez tax form Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. 2012 1040ez tax form Rules for Withholding, Depositing, and ReportingTransfer of property. 2012 1040ez tax form Amount of deposit. 2012 1040ez tax form Limitation. 2012 1040ez tax form Conformity rules. 2012 1040ez tax form Election not to withhold income tax. 2012 1040ez tax form How To Get Tax Help 1. 2012 1040ez tax form Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. 2012 1040ez tax form 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. 2012 1040ez tax form Performance of services. 2012 1040ez tax form   A person who performs services for you does not have to be your employee. 2012 1040ez tax form A person may perform services for you as an independent contractor, partner, or director. 2012 1040ez tax form 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. 2012 1040ez tax form Provider of benefit. 2012 1040ez tax form   You are the provider of a fringe benefit if it is provided for services performed for you. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Recipient of benefit. 2012 1040ez tax form   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. 2012 1040ez tax form That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. 2012 1040ez tax form For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. 2012 1040ez tax form 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. 2012 1040ez tax form Section 2 discusses the exclusions that apply to certain fringe benefits. 2012 1040ez tax form Any benefit not excluded under the rules discussed in section 2 is taxable. 2012 1040ez tax form Including taxable benefits in pay. 2012 1040ez tax form   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. 2012 1040ez tax form Any amount the law excludes from pay. 2012 1040ez tax form Any amount the recipient paid for the benefit. 2012 1040ez tax form The rules used to determine the value of a fringe benefit are discussed in section 3. 2012 1040ez tax form   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. 2012 1040ez tax form However, you can use special rules to withhold, deposit, and report the employment taxes. 2012 1040ez tax form These rules are discussed in section 4. 2012 1040ez tax form   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. 2012 1040ez tax form However, you may have to report the benefit on one of the following information returns. 2012 1040ez tax form 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. 2012 1040ez tax form For more information, see the instructions for the forms listed above. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. 2012 1040ez tax form However, a cafeteria plan can include a qualified 401(k) plan as a benefit. 2012 1040ez tax form Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. 2012 1040ez tax form Qualified benefits. 2012 1040ez tax form   A cafeteria plan can include the following benefits discussed in section 2. 2012 1040ez tax form Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). 2012 1040ez tax form Adoption assistance. 2012 1040ez tax form Dependent care assistance. 2012 1040ez tax form Group-term life insurance coverage (including costs that cannot be excluded from wages). 2012 1040ez tax form Health savings accounts (HSAs). 2012 1040ez tax form Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. 2012 1040ez tax form Benefits not allowed. 2012 1040ez tax form   A cafeteria plan cannot include the following benefits discussed in section 2. 2012 1040ez tax form Archer MSAs. 2012 1040ez tax form See Accident and Health Benefits in section 2. 2012 1040ez tax form Athletic facilities. 2012 1040ez tax form De minimis (minimal) benefits. 2012 1040ez tax form Educational assistance. 2012 1040ez tax form Employee discounts. 2012 1040ez tax form Employer-provided cell phones. 2012 1040ez tax form Lodging on your business premises. 2012 1040ez tax form Meals. 2012 1040ez tax form Moving expense reimbursements. 2012 1040ez tax form No-additional-cost services. 2012 1040ez tax form Transportation (commuting) benefits. 2012 1040ez tax form Tuition reduction. 2012 1040ez tax form Working condition benefits. 2012 1040ez tax form It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). 2012 1040ez tax form $2,500 limit on a health flexible spending arrangement (FSA). 2012 1040ez tax form   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. 2012 1040ez tax form For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. 2012 1040ez tax form   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form   For more information, see Notice 2012-40, 2012-26 I. 2012 1040ez tax form R. 2012 1040ez tax form B. 2012 1040ez tax form 1046, available at www. 2012 1040ez tax form irs. 2012 1040ez tax form gov/irb/2012-26_IRB/ar09. 2012 1040ez tax form html. 2012 1040ez tax form Employee. 2012 1040ez tax form   For these plans, treat the following individuals as employees. 2012 1040ez tax form A current common-law employee. 2012 1040ez tax form See section 2 in Publication 15 (Circular E) for more information. 2012 1040ez tax form A full-time life insurance agent who is a current statutory employee. 2012 1040ez tax form 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. 2012 1040ez tax form Exception for S corporation shareholders. 2012 1040ez tax form   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Plans that favor highly compensated employees. 2012 1040ez tax form   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. 2012 1040ez tax form A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. 2012 1040ez tax form   A highly compensated employee for this purpose is any of the following employees. 2012 1040ez tax form An officer. 2012 1040ez tax form A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. 2012 1040ez tax form An employee who is highly compensated based on the facts and circumstances. 2012 1040ez tax form A spouse or dependent of a person described in (1), (2), or (3). 2012 1040ez tax form Plans that favor key employees. 2012 1040ez tax form   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. 2012 1040ez tax form 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. 2012 1040ez tax form However, a plan you maintain under a collective bargaining agreement does not favor key employees. 2012 1040ez tax form   A key employee during 2014 is generally an employee who is either of the following. 2012 1040ez tax form An officer having annual pay of more than $170,000. 2012 1040ez tax form An employee who for 2014 is either of the following. 2012 1040ez tax form A 5% owner of your business. 2012 1040ez tax form A 1% owner of your business whose annual pay was more than $150,000. 2012 1040ez tax form Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. 2012 1040ez tax form Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. 2012 1040ez tax form Eligible employer. 2012 1040ez tax form   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Eligibility and participation requirements. 2012 1040ez tax form   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. 2012 1040ez tax form 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. 2012 1040ez tax form S. 2012 1040ez tax form source. 2012 1040ez tax form Contribution requirements. 2012 1040ez tax form   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. 2012 1040ez tax form 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. 2012 1040ez tax form More information. 2012 1040ez tax form   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. 2012 1040ez tax form 2. 2012 1040ez tax form Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. 2012 1040ez tax form These rules exclude all or part of the value of certain benefits from the recipient's pay. 2012 1040ez tax form The excluded benefits are not subject to federal income tax withholding. 2012 1040ez tax form 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. 2012 1040ez tax form This section discusses the exclusion rules for the following fringe benefits. 2012 1040ez tax form Accident and health benefits. 2012 1040ez tax form Achievement awards. 2012 1040ez tax form Adoption assistance. 2012 1040ez tax form Athletic facilities. 2012 1040ez tax form De minimis (minimal) benefits. 2012 1040ez tax form Dependent care assistance. 2012 1040ez tax form Educational assistance. 2012 1040ez tax form Employee discounts. 2012 1040ez tax form Employee stock options. 2012 1040ez tax form Employer-provided cell phones. 2012 1040ez tax form Group-term life insurance coverage. 2012 1040ez tax form Health savings accounts (HSAs). 2012 1040ez tax form Lodging on your business premises. 2012 1040ez tax form Meals. 2012 1040ez tax form Moving expense reimbursements. 2012 1040ez tax form No-additional-cost services. 2012 1040ez tax form Retirement planning services. 2012 1040ez tax form Transportation (commuting) benefits. 2012 1040ez tax form Tuition reduction. 2012 1040ez tax form Working condition benefits. 2012 1040ez tax form See Table 2-1, later, for an overview of the employment tax treatment of these benefits. 2012 1040ez tax form Table 2-1. 2012 1040ez tax form Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. 2012 1040ez tax form ) 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. 2012 1040ez tax form Exempt, except for certain payments to S corporation employees who are 2% shareholders. 2012 1040ez tax form Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). 2012 1040ez tax form 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. 2012 1040ez tax form 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). 2012 1040ez tax form Educational assistance Exempt up to $5,250 of benefits each year. 2012 1040ez tax form (See Educational Assistance , later in this section. 2012 1040ez tax form ) Employee discounts Exempt3 up to certain limits. 2012 1040ez tax form (See Employee Discounts , later in this section. 2012 1040ez tax form ) Employee stock options See Employee Stock Options , later in this section. 2012 1040ez tax form Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. 2012 1040ez tax form Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. 2012 1040ez tax form (Special rules apply to former employees. 2012 1040ez tax form ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. 2012 1040ez tax form (See Health Savings Accounts , later in this section. 2012 1040ez tax form ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. 2012 1040ez tax form Meals Exempt if furnished on your business premises for your convenience. 2012 1040ez tax form Exempt if de minimis. 2012 1040ez tax form Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. 2012 1040ez tax form 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). 2012 1040ez tax form (See Transportation (Commuting) Benefits , later in this section. 2012 1040ez tax form ) Exempt if de minimis. 2012 1040ez tax form Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). 2012 1040ez tax form Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. 2012 1040ez tax form 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. 2012 1040ez tax form 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. 2012 1040ez tax form 4 Exemption does not apply to certain key employees under a plan that favors those employees. 2012 1040ez tax form 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. 2012 1040ez tax form Also, show it in box 12 with code “C. 2012 1040ez tax form ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. 2012 1040ez tax form Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. 2012 1040ez tax form Contributions to the cost of accident or health insurance including qualified long-term care insurance. 2012 1040ez tax form Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. 2012 1040ez tax form Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). 2012 1040ez tax form 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. 2012 1040ez tax form Payments or reimbursements of medical expenses. 2012 1040ez tax form Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). 2012 1040ez tax form The payments must be figured without regard to any period of absence from work. 2012 1040ez tax form Accident or health plan. 2012 1040ez tax form   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. 2012 1040ez tax form The plan may be insured or noninsured and does not need to be in writing. 2012 1040ez tax form Employee. 2012 1040ez tax form   For this exclusion, treat the following individuals as employees. 2012 1040ez tax form A current common-law employee. 2012 1040ez tax form A full-time life insurance agent who is a current statutory employee. 2012 1040ez tax form A retired employee. 2012 1040ez tax form A former employee you maintain coverage for based on the employment relationship. 2012 1040ez tax form A widow or widower of an individual who died while an employee. 2012 1040ez tax form A widow or widower of a retired employee. 2012 1040ez tax form 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. 2012 1040ez tax form Special rule for certain government plans. 2012 1040ez tax form   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. 2012 1040ez tax form See section 105(j) for details. 2012 1040ez tax form Exception for S corporation shareholders. 2012 1040ez tax form   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Exclusion from wages. 2012 1040ez tax form   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. 2012 1040ez tax form Exception for certain long-term care benefits. 2012 1040ez tax form   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. 2012 1040ez tax form 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. 2012 1040ez tax form However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. 2012 1040ez tax form S corporation shareholders. 2012 1040ez tax form   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. 2012 1040ez tax form 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. 2012 1040ez tax form Exception for highly compensated employees. 2012 1040ez tax form   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. 2012 1040ez tax form 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. 2012 1040ez tax form   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. 2012 1040ez tax form   A highly compensated employee for this exception is any of the following individuals. 2012 1040ez tax form One of the five highest paid officers. 2012 1040ez tax form An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. 2012 1040ez tax form An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). 2012 1040ez tax form   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. 2012 1040ez tax form COBRA premiums. 2012 1040ez tax form   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). 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. 2012 1040ez tax form Employee. 2012 1040ez tax form   For this exclusion, treat the following individuals as employees. 2012 1040ez tax form A current employee. 2012 1040ez tax form A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. 2012 1040ez tax form 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. 2012 1040ez tax form Exception for S corporation shareholders. 2012 1040ez tax form   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Exclusion from wages. 2012 1040ez tax form   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. 2012 1040ez tax form The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). 2012 1040ez tax form See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. 2012 1040ez tax form    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. 2012 1040ez tax form   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. 2012 1040ez tax form The part of the cost that is more than your allowable deduction (up to the value of the awards). 2012 1040ez tax form The amount by which the value of the awards exceeds your allowable deduction. 2012 1040ez tax form Exclude the remaining value of the awards from the employee's wages. 2012 1040ez tax form Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. 2012 1040ez tax form It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. 2012 1040ez tax form 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. 2012 1040ez tax form It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). 2012 1040ez tax form 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. 2012 1040ez tax form You give reasonable notice of the plan to eligible employees. 2012 1040ez tax form Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. 2012 1040ez tax form For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. 2012 1040ez tax form The employee was a 5% owner at any time during the year or the preceding year. 2012 1040ez tax form The employee received more than $115,000 in pay for the preceding year. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. 2012 1040ez tax form For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. 2012 1040ez tax form 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. 2012 1040ez tax form Use code “T” to identify this amount. 2012 1040ez tax form Exception for S corporation shareholders. 2012 1040ez tax form   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form On-premises facility. 2012 1040ez tax form   The athletic facility must be located on premises you own or lease. 2012 1040ez tax form It does not have to be located on your business premises. 2012 1040ez tax form However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. 2012 1040ez tax form Employee. 2012 1040ez tax form   For this exclusion, treat the following individuals as employees. 2012 1040ez tax form A current employee. 2012 1040ez tax form A former employee who retired or left on disability. 2012 1040ez tax form A widow or widower of an individual who died while an employee. 2012 1040ez tax form A widow or widower of a former employee who retired or left on disability. 2012 1040ez tax form 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. 2012 1040ez tax form A partner who performs services for a partnership. 2012 1040ez tax form De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Examples of de minimis benefits include the following. 2012 1040ez tax form Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. 2012 1040ez tax form See Employer-Provided Cell Phones , later in this section, for details. 2012 1040ez tax form 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. 2012 1040ez tax form Holiday gifts, other than cash, with a low fair market value. 2012 1040ez tax form 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. 2012 1040ez tax form Meals. 2012 1040ez tax form See Meals , later in this section, for details. 2012 1040ez tax form Occasional parties or picnics for employees and their guests. 2012 1040ez tax form Occasional tickets for theater or sporting events. 2012 1040ez tax form Transportation fare. 2012 1040ez tax form See Transportation (Commuting) Benefits , later in this section, for details. 2012 1040ez tax form Employee. 2012 1040ez tax form   For this exclusion, treat any recipient of a de minimis benefit as an employee. 2012 1040ez tax form 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. 2012 1040ez tax form The services must be for a qualifying person's care and must be provided to allow the employee to work. 2012 1040ez tax form 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. 2012 1040ez tax form For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. 2012 1040ez tax form Employee. 2012 1040ez tax form   For this exclusion, treat the following individuals as employees. 2012 1040ez tax form A current employee. 2012 1040ez tax form 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. 2012 1040ez tax form Yourself (if you are a sole proprietor). 2012 1040ez tax form A partner who performs services for a partnership. 2012 1040ez tax form Exclusion from wages. 2012 1040ez tax form   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. 2012 1040ez tax form   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. 2012 1040ez tax form This limit is reduced to $2,500 for married employees filing separate returns. 2012 1040ez tax form   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. 2012 1040ez tax form 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. 2012 1040ez tax form For more information on the earned income limit, see Publication 503. 2012 1040ez tax form Exception for highly compensated employees. 2012 1040ez tax form   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. 2012 1040ez tax form   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. 2012 1040ez tax form The employee was a 5% owner at any time during the year or the preceding year. 2012 1040ez tax form The employee received more than $115,000 in pay for the preceding year. 2012 1040ez tax form 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. 2012 1040ez tax form Form W-2. 2012 1040ez tax form   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. 2012 1040ez tax form Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. 2012 1040ez tax form Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. 2012 1040ez tax form Example. 2012 1040ez tax form   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. 2012 1040ez tax form In addition, it provides occasional on-site dependent care to its employees at no cost. 2012 1040ez tax form Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. 2012 1040ez tax form In addition, Emily used the on-site dependent care several times. 2012 1040ez tax form The fair market value of the on-site care was $700. 2012 1040ez tax form 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). 2012 1040ez tax form 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. 2012 1040ez tax form Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. 2012 1040ez tax form The exclusion also applies to graduate level courses. 2012 1040ez tax form Educational assistance means amounts you pay or incur for your employees' education expenses. 2012 1040ez tax form These expenses generally include the cost of books, equipment, fees, supplies, and tuition. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Nor do they include the cost of lodging, meals, or transportation. 2012 1040ez tax form Educational assistance program. 2012 1040ez tax form   An educational assistance program is a separate written plan that provides educational assistance only to your employees. 2012 1040ez tax form The program qualifies only if all of the following tests are met. 2012 1040ez tax form The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. 2012 1040ez tax form 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. 2012 1040ez tax form The program does not provide more than 5% of its benefits during the year for shareholders or owners. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form You give reasonable notice of the program to eligible employees. 2012 1040ez tax form Your program can cover former employees if their employment is the reason for the coverage. 2012 1040ez tax form   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. 2012 1040ez tax form The employee was a 5% owner at any time during the year or the preceding year. 2012 1040ez tax form The employee received more than $115,000 in pay for the preceding year. 2012 1040ez tax form 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. 2012 1040ez tax form Employee. 2012 1040ez tax form   For this exclusion, treat the following individuals as employees. 2012 1040ez tax form A current employee. 2012 1040ez tax form A former employee who retired, left on disability, or was laid off. 2012 1040ez tax form 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. 2012 1040ez tax form Yourself (if you are a sole proprietor). 2012 1040ez tax form A partner who performs services for a partnership. 2012 1040ez tax form Exclusion from wages. 2012 1040ez tax form   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. 2012 1040ez tax form Assistance over $5,250. 2012 1040ez tax form   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. 2012 1040ez tax form Working condition benefits may be excluded from wages. 2012 1040ez tax form 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. 2012 1040ez tax form See Working Condition Benefits , later, in this section. 2012 1040ez tax form 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. 2012 1040ez tax form 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). 2012 1040ez tax form Employee. 2012 1040ez tax form   For this exclusion, treat the following individuals as employees. 2012 1040ez tax form A current employee. 2012 1040ez tax form A former employee who retired or left on disability. 2012 1040ez tax form A widow or widower of an individual who died while an employee. 2012 1040ez tax form A widow or widower of an employee who retired or left on disability. 2012 1040ez tax form 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. 2012 1040ez tax form A partner who performs services for a partnership. 2012 1040ez tax form Exclusion from wages. 2012 1040ez tax form   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. 2012 1040ez tax form For a discount on services, 20% of the price you charge nonemployee customers for the service. 2012 1040ez tax form For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. 2012 1040ez tax form   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. 2012 1040ez tax form 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. 2012 1040ez tax form Exception for highly compensated employees. 2012 1040ez tax form   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. 2012 1040ez tax form All of your employees. 2012 1040ez tax form A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. 2012 1040ez tax form   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. 2012 1040ez tax form The employee was a 5% owner at any time during the year or the preceding year. 2012 1040ez tax form The employee received more than $115,000 in pay for the preceding year. 2012 1040ez tax form 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. 2012 1040ez tax form Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form ” See Regulations section 1. 2012 1040ez tax form 83-7. 2012 1040ez tax form 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. 2012 1040ez tax form The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. 2012 1040ez tax form See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. 2012 1040ez tax form You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. 2012 1040ez tax form irs. 2012 1040ez tax form gov/pub/irs-irbs/irb02-19. 2012 1040ez tax form pdf. 2012 1040ez tax form See Revenue Ruling 2004-60, 2004-24 I. 2012 1040ez tax form R. 2012 1040ez tax form B. 2012 1040ez tax form 1051, available at www. 2012 1040ez tax form irs. 2012 1040ez tax form gov/irb/2004-24_IRB/ar13. 2012 1040ez tax form html. 2012 1040ez tax form For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Noncompensatory business purposes. 2012 1040ez tax form   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. 2012 1040ez tax form 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. 2012 1040ez tax form Cell phones provided to promote goodwill, boost morale, or attract prospective employees. 2012 1040ez tax form   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. 2012 1040ez tax form Additional information. 2012 1040ez tax form   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. 2012 1040ez tax form R. 2012 1040ez tax form B. 2012 1040ez tax form 407, available at  www. 2012 1040ez tax form irs. 2012 1040ez tax form gov/irb/2011-38_IRB/ar07. 2012 1040ez tax form html. 2012 1040ez tax form Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. 2012 1040ez tax form It provides a general death benefit that is not included in income. 2012 1040ez tax form You provide it to a group of employees. 2012 1040ez tax form See The 10-employee rule , later. 2012 1040ez tax form It provides an amount of insurance to each employee based on a formula that prevents individual selection. 2012 1040ez tax form This formula must use factors such as the employee's age, years of service, pay, or position. 2012 1040ez tax form You provide it under a policy you directly or indirectly carry. 2012 1040ez tax form 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. 2012 1040ez tax form Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. 2012 1040ez tax form Group-term life insurance does not include the following insurance. 2012 1040ez tax form Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. 2012 1040ez tax form Life insurance on the life of your employee's spouse or dependent. 2012 1040ez tax form However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. 2012 1040ez tax form See De Minimis (Minimal) Benefits , earlier in this section. 2012 1040ez tax form 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. 2012 1040ez tax form See Regulations section 1. 2012 1040ez tax form 79-1 for details. 2012 1040ez tax form Employee. 2012 1040ez tax form   For this exclusion, treat the following individuals as employees. 2012 1040ez tax form A current common-law employee. 2012 1040ez tax form A full-time life insurance agent who is a current statutory employee. 2012 1040ez tax form An individual who was formerly your employee under (1) or (2). 2012 1040ez tax form 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. 2012 1040ez tax form Exception for S corporation shareholders. 2012 1040ez tax form   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form The 10-employee rule. 2012 1040ez tax form   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. 2012 1040ez tax form   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. 2012 1040ez tax form For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Exceptions. 2012 1040ez tax form   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. 2012 1040ez tax form   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. 2012 1040ez tax form See Regulations section 1. 2012 1040ez tax form 79-1 for details. 2012 1040ez tax form   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. 2012 1040ez tax form   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. 2012 1040ez tax form They were 65 or older. 2012 1040ez tax form They customarily work 20 hours or less a week or 5 months or less in a calendar year. 2012 1040ez tax form They have not been employed for the waiting period given in the policy. 2012 1040ez tax form This waiting period cannot be more than 6 months. 2012 1040ez tax form Exclusion from wages. 2012 1040ez tax form   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. 2012 1040ez tax form You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. 2012 1040ez tax form 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. 2012 1040ez tax form Coverage over the limit. 2012 1040ez tax form   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. 2012 1040ez tax form Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. 2012 1040ez tax form Also, show it in box 12 with code “C. 2012 1040ez tax form ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. 2012 1040ez tax form   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. 2012 1040ez tax form For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. 2012 1040ez tax form You must prorate the cost from the table if less than a full month of coverage is involved. 2012 1040ez tax form Table 2-2. 2012 1040ez tax form Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . 2012 1040ez tax form 05 25 through 29 . 2012 1040ez tax form 06 30 through 34 . 2012 1040ez tax form 08 35 through 39 . 2012 1040ez tax form 09 40 through 44 . 2012 1040ez tax form 10 45 through 49 . 2012 1040ez tax form 15 50 through 54 . 2012 1040ez tax form 23 55 through 59 . 2012 1040ez tax form 43 60 through 64 . 2012 1040ez tax form 66 65 through 69 1. 2012 1040ez tax form 27 70 and older 2. 2012 1040ez tax form 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. 2012 1040ez tax form Example. 2012 1040ez tax form Tom's employer provides him with group-term life insurance coverage of $200,000. 2012 1040ez tax form Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. 2012 1040ez tax form Tom's employer must include $170 in his wages. 2012 1040ez tax form The $200,000 of insurance coverage is reduced by $50,000. 2012 1040ez tax form The yearly cost of $150,000 of coverage is $270 ($. 2012 1040ez tax form 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. 2012 1040ez tax form The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. 2012 1040ez tax form The employer also enters $170 in box 12 with code “C. 2012 1040ez tax form ” Coverage for dependents. 2012 1040ez tax form   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. 2012 1040ez tax form 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. 2012 1040ez tax form The cost of the insurance is determined by using Table 2-2. 2012 1040ez tax form Former employees. 2012 1040ez tax form   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. 2012 1040ez tax form You are not required to collect those taxes. 2012 1040ez tax form 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. 2012 1040ez tax form Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. 2012 1040ez tax form ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. 2012 1040ez tax form Exception for key employees. 2012 1040ez tax form   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. 2012 1040ez tax form This exception generally does not apply to church plans. 2012 1040ez tax form When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. 2012 1040ez tax form Include the cost in boxes 1, 3, and 5 of Form W-2. 2012 1040ez tax form 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. 2012 1040ez tax form   For this purpose, the cost of the insurance is the greater of the following amounts. 2012 1040ez tax form The premiums you pay for the employee's insurance. 2012 1040ez tax form See Regulations section 1. 2012 1040ez tax form 79-4T(Q&A 6) for more information. 2012 1040ez tax form The cost you figure using Table 2-2. 2012 1040ez tax form   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. 2012 1040ez tax form See section 416(i) of the Internal Revenue Code for more information. 2012 1040ez tax form An officer having annual pay of more than $170,000. 2012 1040ez tax form An individual who for 2014 was either of the following. 2012 1040ez tax form A 5% owner of your business. 2012 1040ez tax form A 1% owner of your business whose annual pay was more than $150,000. 2012 1040ez tax form   A former employee who was a key employee upon retirement or separation from service is also a key employee. 2012 1040ez tax form   Your plan does not favor key employees as to participation if at least one of the following is true. 2012 1040ez tax form It benefits at least 70% of your employees. 2012 1040ez tax form At least 85% of the participating employees are not key employees. 2012 1040ez tax form It benefits employees who qualify under a set of rules you set up that do not favor key employees. 2012 1040ez tax form   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. 2012 1040ez tax form   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. 2012 1040ez tax form S. 2012 1040ez tax form 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. 2012 1040ez tax form   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. 2012 1040ez tax form Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. 2012 1040ez tax form S corporation shareholders. 2012 1040ez tax form   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. 2012 1040ez tax form When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. 2012 1040ez tax form Include the cost in boxes 1, 3, and 5 of Form W-2. 2012 1040ez tax form 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. 2012 1040ez tax form Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. 2012 1040ez tax form Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form For more information about HSAs, visit the Department of Treasury's website at www. 2012 1040ez tax form treasury. 2012 1040ez tax form gov and enter “HSA” in the search box. 2012 1040ez tax form Eligibility. 2012 1040ez tax form   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. 2012 1040ez tax form 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. 2012 1040ez tax form   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. 2012 1040ez tax form Exceptions. 2012 1040ez tax form   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form For more information, see Other employee health plans in Publication 969. 2012 1040ez tax form Employer contributions. 2012 1040ez tax form   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. 2012 1040ez tax form 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. 2012 1040ez tax form   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. 2012 1040ez tax form 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. 2012 1040ez tax form No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. 2012 1040ez tax form Nondiscrimination rules. 2012 1040ez tax form    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. 2012 1040ez tax form Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. 2012 1040ez tax form   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. 2012 1040ez tax form 4980G-4. 2012 1040ez tax form Exception. 2012 1040ez tax form   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. 2012 1040ez tax form A highly compensated employee for 2014 is an employee who meets either of the following tests. 2012 1040ez tax form The employee was a 5% owner at any time during the year or the preceding year. 2012 1040ez tax form The employee received more than $115,000 in pay for the preceding year. 2012 1040ez tax form 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. 2012 1040ez tax form Partnerships and S corporations. 2012 1040ez tax form   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. 2012 1040ez tax form 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. 2012 1040ez tax form Cafeteria plans. 2012 1040ez tax form   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. 2012 1040ez tax form However, cafeteria plan nondiscrimination rules still apply. 2012 1040ez tax form For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. 2012 1040ez tax form Contributions that favor lower-paid employees are not prohibited. 2012 1040ez tax form Reporting requirements. 2012 1040ez tax form   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. 2012 1040ez tax form ” 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. 2012 1040ez tax form 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. 2012 1040ez tax form It is furnished on your business premises. 2012 1040ez tax form It is furnished for your convenience. 2012 1040ez tax form The employee must accept it as a condition of employment. 2012 1040ez tax form Different tests may apply to lodging furnished by educational institutions. 2012 1040ez tax form See section 119(d) of the Internal Revenue Code for details. 2012 1040ez tax form The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. 2012 1040ez tax form On your business premises. 2012 1040ez tax form   For this exclusion, your business premises is generally your employee's place of work. 2012 1040ez tax form 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. 2012 1040ez tax form For your convenience. 2012 1040ez tax form   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. 2012 1040ez tax form 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. 2012 1040ez tax form This is true even if a law or an employment contract provides that the lodging is furnished as pay. 2012 1040ez tax form However, a written statement that the lodging is furnished for your convenience is not sufficient. 2012 1040ez tax form Condition of employment. 2012 1040ez tax form   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. 2012 1040ez tax form Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. 2012 1040ez tax form   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. 2012 1040ez tax form Example. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form S corporation shareholders. 2012 1040ez tax form   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. 2012 1040ez tax form 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. 2012 1040ez tax form The exclusion applies, for example, to the following items. 2012 1040ez tax form Coffee, doughnuts, or soft drinks. 2012 1040ez tax form Occasional meals or meal money provided to enable an employee to work overtime. 2012 1040ez tax form However, the exclusion does not apply to meal money figured on the basis of hours worked. 2012 1040ez tax form Occasional parties or picnics for employees and their guests. 2012 1040ez tax form 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. 2012 1040ez tax form 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. 2012 1040ez tax form If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. 2012 1040ez tax form The 50% limit on deductions for the cost of meals does not apply. 2012 1040ez tax form The deduction limit on meals is discussed in chapter 2 of Publication 535. 2012 1040ez tax form Employee. 2012 1040ez tax form   For this exclusion, treat any recipient of a de minimis meal as