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How To Fill 1040x

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How To Fill 1040x

How to fill 1040x Publication 721 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. How to fill 1040x Tax questions. How to fill 1040x Useful Items - You may want to see: Reminders Future developments. How to fill 1040x  For the latest information about developments related to Publication 721, such as legislation enacted after it was published, go to www. How to fill 1040x IRS. How to fill 1040x gov/pub721. How to fill 1040x Phased retirement. How to fill 1040x   The new phased retirement program was signed into law by the Moving Ahead for Progress in the 21st Century Act and will be available for retirement eligible individuals once the regulations for this program are effective. How to fill 1040x This new program will allow eligible employees to begin receiving annuity payments while working part-time. How to fill 1040x For more information, go to the Office of Personnel Management (OPM) website at www. How to fill 1040x opm. How to fill 1040x gov. How to fill 1040x Roth Thrift Savings Plan (TSP) balance. How to fill 1040x  You may be able to contribute to a designated Roth account through the TSP known as the Roth TSP. How to fill 1040x Roth TSP contributions are after-tax contributions, subject to the same contribution limits as the traditional TSP. How to fill 1040x Qualified distributions from a Roth TSP are not included in your income. How to fill 1040x See Thrift Savings Plan in Part II for more information. How to fill 1040x Rollovers. How to fill 1040x  You can roll over certain amounts from the CSRS, FERS, or TSP, to a tax-sheltered annuity plan (403(b) plan) or a state or local government section 457 deferred compensation plan. How to fill 1040x See Rollover Rules in Part II. How to fill 1040x Rollovers by surviving spouse. How to fill 1040x  You may be able to roll over a distribution you receive as the surviving spouse of a deceased employee or retiree into a qualified retirement plan or an IRA. How to fill 1040x See Rollover Rules in Part II. How to fill 1040x Thrift Savings Plan (TSP) beneficiary participant accounts. How to fill 1040x  If you are the spouse beneficiary of a decedent's TSP account, you have the option of leaving the death benefit payment in a TSP account in your own name (a beneficiary participant account). How to fill 1040x The amounts in the beneficiary participant account are neither taxable or reportable until you choose to make a withdrawal, or otherwise receive a distribution from the account. How to fill 1040x Benefits for public safety officer's survivors. How to fill 1040x  A survivor annuity received by the spouse, former spouse, or child of a public safety officer killed in the line of duty generally will be excluded from the recipient's income. How to fill 1040x For more information, see Dependents of public safety officers in Part IV. How to fill 1040x Uniformed services Thrift Savings Plan (TSP) accounts. How to fill 1040x  If you have a uniformed services TSP account, it may include contributions from combat zone pay. How to fill 1040x This pay is tax-exempt and contributions attributable to that pay are tax-exempt when they are distributed from the uniformed services TSP account. How to fill 1040x However, any earnings on those contributions are subject to tax when they are distributed. How to fill 1040x The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. How to fill 1040x If you have both a civilian and a uniformed services TSP account, you should apply the rules discussed in this publication separately to each account. How to fill 1040x You can get more information from the TSP website, www. How to fill 1040x tsp. How to fill 1040x gov, or the TSP Service Office. How to fill 1040x Photographs of missing children. How to fill 1040x  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. How to fill 1040x Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. How to fill 1040x You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. How to fill 1040x Introduction This publication explains how the federal income tax rules apply to civil service retirement benefits received by retired federal employees (including those disabled) or their survivors. How to fill 1040x These benefits are paid primarily under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS). How to fill 1040x Tax rules for annuity benefits. How to fill 1040x   Part of the annuity benefits you receive is a tax-free recovery of your contributions to the CSRS or FERS. How to fill 1040x The rest of your benefits are taxable. How to fill 1040x If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the taxable and tax-free parts. How to fill 1040x If your annuity starting date is before November 19, 1996, you generally could have chosen to use the Simplified Method or the General Rule. How to fill 1040x See Part II, Rules for Retirees . How to fill 1040x Thrift Savings Plan. How to fill 1040x   The Thrift Savings Plan (TSP) provides federal employees with the same savings and tax benefits that many private employers offer their employees. How to fill 1040x This plan is similar to private sector 401(k) plans. How to fill 1040x You can defer tax on part of your pay by having it contributed to your traditional balance in the plan. How to fill 1040x The contributions and earnings on them are not taxed until they are distributed to you. How to fill 1040x Also the TSP offers a Roth TSP option. How to fill 1040x Contributions to this type of balance are after tax and qualified distributions from the account are tax free. How to fill 1040x See Thrift Savings Plan in Part II. How to fill 1040x Comments and suggestions. How to fill 1040x   We welcome your comments about this publication and your suggestions for future editions. How to fill 1040x   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. How to fill 1040x NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. How to fill 1040x Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. How to fill 1040x   You can send your comments from www. How to fill 1040x irs. How to fill 1040x gov/formspubs/. How to fill 1040x Click on “More Information” and then on “Comment on Tax Forms and Publications”. How to fill 1040x   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. How to fill 1040x Ordering forms and publications. How to fill 1040x   Visit www. How to fill 1040x irs. How to fill 1040x gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. How to fill 1040x Internal Revenue Service 1201 N. How to fill 1040x Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. How to fill 1040x   If you have a tax question, check the information available on IRS. How to fill 1040x gov or call 1-800-829-1040. How to fill 1040x We cannot answer tax questions sent to either of the above addresses. How to fill 1040x Useful Items - You may want to see: Publication 524 Credit for the Elderly or the Disabled 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 939 General Rule for Pensions and Annuities Form (and Instructions) CSA 1099R Statement of Annuity Paid CSF 1099R Statement of Survivor Annuity Paid W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. How to fill 1040x 5329 Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts See How To Get Tax Help near the end of this publication for information about getting publications and forms. How to fill 1040x Prev  Up  Next   Home   More Online Publications
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Compliance & Enforcement News

Offshore Tax-Avoidance and IRS Compliance Efforts
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Fiscal Year 2013 Enforcement and Service Results
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FY 2011 Enforcement Results
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FY 2009 Enforcement Results
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Tips for Choosing a Tax Return Preparer
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IRS Releases New Tax Gap Estimates; Compliance Rates Remain Statistically Unchanged From Previous Study
IR-2012-4, Jan. 6, 2012 — The Internal Revenue Service today released a new set of tax gap estimates for tax year 2006. The tax gap is defined as the amount of tax liability faced by taxpayers that is not paid on time.

IRS Office of Professional Responsibility Prevails on Appeal Against CPA
IR-2011-48, April 25, 2011 — IRS Office of Professional Responsibility prevailed in an agency appeal against a Florida certified public accountant, according to the published Decision on Appeal.

IRS Begins Enforcement of New Return Preparer Rules
IR-2011-47, April 25, 2011 — The IRS is taking steps to stop tax preparers with criminal tax convictions or permanent injunctions from preparing tax returns.

How to Choose a Tax Return Preparer and Avoid Preparer Fraud
FS-2010-03, January 2010 — IRS fact sheet on how to choose a tax return preparer and avoid preparer fraud.

How to Choose a Tax Preparer and Avoid Preparer Fraud
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Tax Return Preparer Fraud
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Fraudulent Telephone Tax Refunds, Abusive Roth IRAs Top Off 2007 “Dirty Dozen” Tax Scams
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IRS Moves to Prevent Telephone Tax Refund Abuse; Help Taxpayers Make Accurate Requests
IR-2007-27, Feb. 7, 2007 — The Internal Revenue Service announced today it is taking additional steps to prevent abuse by tax preparers and help taxpayers make accurate requests for the one-time telephone excise tax refund.

Statement of IRS Commissioner Mark W. Everson on the FY 2008 Budget
Feb. 5, 2007 — The president’s 2008 budget request for the IRS, together with the accompanying legislative proposals concerning tax administration... will do much to promote compliance with our tax law.

Tax Return Preparer Fraud
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IRS Accepts Settlement Offer in Largest Transfer Pricing Dispute
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IRS and States Join Forces to Combat Money Laundering
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IRS Debunks Frivolous Arguments on Paying Taxes
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IRS Updates Tax Gap Estimates
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IRS Improves Enforcement and Services in 2005
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IRS Launches Abusive Transaction Settlement Initiative
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KPMG to Pay $456 Million for Criminal Violations
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Robust Response for Executive Stock Option Initiative; Son of Boss Settlement Heading for $4 Billion
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IRS Collects $3.2 Billion from Son of Boss; Final Figure Should Top $3.5 Billion
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IRS Obtains More Than 100 Injunctions Against Tax Scheme Promoters
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States See Son of Boss Benefits; Tax Administrators Praise Efforts
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Understanding the Tax Gap
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Report on IRS Review of Alleged Political Campaign Intervention 2005
The Treasury Inspector General reports that IRS properly ran its program for investigating claims of inappropriate political campaign actions by tax-exempt organizations.

Page Last Reviewed or Updated: 28-Mar-2014

The How To Fill 1040x

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