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Return Software

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Return Software

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

"Going Green" means practicing an environmentally friendly and ecologically responsible lifestyle as well as making decisions to help protect the environment and sustain natural resources. There are lots of reasons to consider going green—too much trash, greenhouse gases, air and water pollution, damage to the ozone layer, and saving money. For example, switching all the light bulbs in a home from conventional incandescent light bulbs to compact fluorescent light (CFL) bulbs could save about $40 over the life of the bulb. Other examples include:

  • Turning your thermostat down two degrees in winter and up two degrees in summer.
  • Making sure your walls and ceilings are well insulated.
  • Replacing bathroom and kitchen faucets with low-flow models.

Make Greener Product Choices

Buying only what you need is the first step to go green, but when you buy, looking for greener products and using products in ways that respect the environment can have a big impact — on the health of your family, pets and the planet. 

The U.S. Environmental Protection Agency (EPA) has a green products web portal to help you navigate the complex world of green products. You can use this portal to find links and information related to greener products from EPA and other sources.  

The EPA has a number of eco-labeling partnership programs to help you identify greener, safer, and more efficient products. The standards behind these labels are based on scientific expertise and use the best available data. Look for these EPA program labels when buying:

  • EnergyStar - for energy efficient electronics and appliances
  • WaterSense - water efficient products
  • Design for the Environment (DfE) - safer household cleaners and other products. DfE allows products that have been determined to be safer for human health and the environment and effective to carry the DfE label.
  • SmartWay Certified Vehicle - cleaner, more fuel efficient cars and trucks

By making greener product choices you are saving money on utilities and fuel, supporting companies that are driving change and most importantly — you are joining millions of people helping to protect public health and the environment.

You can also choose to buy organic or locally produced food and eco-friendly clothing. For more information about national standards covering organic food, contact the U.S. Department of Agriculture’s Agricultural Marketing Service. There are no national standards for organic clothing, but some fabrics to consider include organic cotton, bark cloth, bamboo, and organic wool.

Beware: Verify Green Marketing Claims

The number of eco-label products,  claiming that they are "eco-friendly" or "all-natural", has increased due to a growing demand for "green products. While this is a positive trend, you may have concerns about "greenwashing" and uncertainty about which environmental standards and labels can be trusted. The Federal Trade Commission's Green Guides provide guidance for companies that make marketing claims regarding the environmental attributes of their products. Here are some tips to help you sort through eco-label marketing:

  • Look for specific (ex. "contains 75% post-consumer recycled materials") rather than vague statements about environmental impact.
  • Determine whether the green marketing claims apply to the packaging, the product, or both.
  • Beware of fake third-party certification. Visit Consumer Reports' website to find reliable environmental labels.

For more information about environmental advertising, contact the FTC.

Reusing and Recycling

Along with buying greener products, you can make a big impact by using the products you buy in ways that respect the environment by: using fewer products and following instructions for product use; conserving energy, water, and materials; recycling items made of materials such as glass, metal, plastic, or paper or disposing of products properly. 

Many utility companies now offer curbside recycling programs that provide U.S. households with a responsible and convenient way to recycle materials. To locate information on recycling services and efforts in your area, call the Earth 911 toll free hotline, 1-800-CLEANUP (253-2687). 

It is easy to safely dispose of many products. Others, such as car batteries, cell phones, televisions, paints, oils, and solvents, require special handling. You can responsibly dispose of these products through your local household hazardous wasters (HHW) collection facility or at your local government's annual HHW collection day. Some items may be given to charitable organizations or even dropped off at electronics retailers. Contact the Environmental Protection Agency (EPA) to help you make the right decisions about the best way to dispose of waste.

The Return Software

Return software Publication 510 - Introductory Material Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Excise Taxes Not Covered What's New Medical device excise tax. Return software  The Affordable Care Act (the “Act”) (Public Law 111-148, amended by Public Law 111-152) imposes a 2. Return software 3% (. Return software 023) excise tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device. Return software The tax applies to sales of taxable medical devices after December 31, 2012. Return software See Taxable Medical Devices in chapter 5, later. Return software Tax on seasonal flu vaccines. Return software  Sales of all vaccines against seasonal influenza are now subject to the section 4131 excise tax at the existing rate of $. Return software 75 per dose of taxable vaccine. Return software Previously, only trivalent influenza vaccines were subject to this tax. Return software See Vaccines in chapter 5, later. Return software Patient-centered outcomes research fee. Return software  The Act imposes a fee on issuers of specified health insurance policies (section 4375) and plan sponsors of applicable self-insured health plans (section 4576) to help fund the Patient-Centered Outcomes Research Institute. Return software The fee, required to be reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st, is based on the average number of lives covered under the policy or plan. Return software The fee applies to policy or plan years ending on or after October 1, 2012. Return software See chapter 11, later. Return software Extension of fuel tax credits. Return software  The following section 6426 credits, previously expired on December 31, 2011, are retroactively extended. Return software Biodiesel or renewable diesel mixture credit. Return software Alternative fuel credit. Return software Alternative fuel mixture credit. Return software See Notice 2013–26 (fuel tax credits) on page 984 of I. Return software R. Return software B. Return software 2013–18 at www. Return software irs. Return software gov/pub/irs-irbs/irb13-18. Return software pdf; also see chapter 2, later. Return software Alternative fuel mixture credit can be claimed on Schedule C (Form 720) only. Return software  For alternative fuel mixtures produced after December 31, 2011, the section 6426 alternative fuel mixture credit can be claimed on Schedule C (Form 720) only, not on Form 4136, Credit for Federal Tax Paid on Fuels, or Schedule 3 (Form 8849), Claim for Refund of Excise Taxes, and only to the extent of your section 4081 taxable fuel liability for gasoline, diesel, and kerosene. Return software See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit in chapter 2, later. Return software Expiration of alcohol fuel mixture credit. Return software  The section 6426 alcohol fuel mixture credit expired after December 31, 2011. Return software Expiration of alcohol fuels credits. Return software  The section 40 alcohol, alcohol mixture, and small ethanol producer credits expired after December 31, 2011. Return software Second generation biofuel producer credit and excise tax. Return software  The section 40 cellulosic biofuel producer credit was retroactively extended to include fuel sold or used through January 2, 2013. Return software After January 2, 2013, cellulosic biofuel is renamed second generation biofuel, which adds algae-based fuel. Return software The second generation biofuel producer credit is for fuel sold or used after January 2, 2013, and before January 1, 2014. Return software You are liable for an excise tax on each gallon of cellulosic or second generation biofuel at the rate you used to figure the credit if you do not use the fuel for the purposes described under Qualified Cellulosic Biofuel Production or Qualified Second Generation Biofuel Production, later. Return software Report the tax on Form 720. Return software See Cellulosic or Second Generation Biofuel Not Used as Fuel, later; also see Form 6478, Biofuel Producer Credit, for more information. Return software Extension of section 40A biodiesel fuels credit. Return software  The biodiesel fuels credit, previously expired on December 31, 2011, is retroactively extended. Return software Future developments. Return software  The IRS has created a page on IRS. Return software gov that includes information about Publication 510 at www. Return software irs. Return software gov/pub510. Return software Information about any future developments will be posted on that page. Return software Reminders Publication 510 updates. Return software  Publication 510 is not updated annually. Return software Instead, it will be updated only when there are major changes in the tax law. Return software Use of international air travel facilities. Return software  Generally, the tax on the use of international air travel facilities increases annually. Return software See the Instructions for Form 720 for the tax rate. Return software For more information, see Air Transportation Taxes in chapter 4. Return software Aviation fuels for use in foreign trade. Return software  Aviation gasoline and kerosene for use in aviation are exempt from the leaking underground storage tank (LUST) tax. Return software Arrow shafts, tax rate. Return software  Generally, the tax on arrow shafts increases annually. Return software See Form 720 for the tax rate. Return software Disregarded entities and qualified subchapter S subsidiaries. Return software  Qualified subchapter S subsidiaries (QSubs) and eligible single-owner disregarded entities are treated as separate entities for excise tax and reporting purposes. Return software QSubs and eligible single-owner disregarded entities must pay and report excise taxes (other than IRS Nos. Return software 31, 51, and 117), register for most excise tax activities, and claim any refunds, credits, and payments under the entity's employer identification number (EIN). Return software These actions cannot take place under the owner's taxpayer identification number (TIN). Return software Some QSubs and disregarded entities may already have an EIN. Return software However, if you are unsure, please call the IRS Business and Specialty Tax line at 1-800-829-4933. Return software Generally, QSubs and eligible single-owner disregarded entities will continue to be treated as disregarded entities for other federal tax purposes (other than employment taxes). Return software For more information on these regulations, see Treasury Decision (T. Return software D. Return software ) 9356, T. Return software D. Return software 9462, and T. Return software D. Return software 9596. Return software You can find T. Return software D. Return software 9356 on page 675 of Internal Revenue Bulletin (I. Return software R. Return software B. Return software ) 2007-39 at  www. Return software irs. Return software gov/pub/irs-irbs/irb07-39. Return software pdf;  T. Return software D. Return software 9462 on page 504 of I. Return software R. Return software B. Return software 2009-42 at  www. Return software irs. Return software gov/pub/irs-irbs/irb09-42. Return software pdf;  and T. Return software D. Return software 9596 on page 84 of I. Return software R. Return software B. Return software 2012-30 at  www. Return software irs. Return software gov/pub/irs-irbs/irb12-30. Return software pdf. Return software Registration for certain activities. Return software  You are required to be registered for certain excise tax activities, such as blending of gasoline, diesel fuel, or kerosene outside the bulk transfer/terminal system. Return software See the instructions for Form 637 for the list of activities for which you must register. Return software Also see Registration Requirements under Fuel Taxes in chapter 1 for information on registration for activities related to fuel. Return software Each business unit that has, or is required to have, a separate employer identification number must be registered. Return software To apply for registration, complete Form 637 and provide the information requested in its instructions. Return software If your application is approved, you will receive a Letter of Registration showing the activities for which you are registered, the effective date of the registration, and your registration number. Return software A copy of Form 637 is not a Letter of Registration. Return software Photographs of missing children. Return software  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Return software Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Return software 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. Return software Introduction This publication covers the excise taxes for which you may be liable and which are reported on Form 720 and other forms. Return software It also covers fuel tax credits and refunds. Return software For information on fuel credits against income tax (the section 40 credits for the production of cellulosic biofuel and second generation biofuel, and the section 40A credit for biodiesel and renewable diesel used as fuel) see the instructions for Form 6478 and Form 8864, Biodiesel and Renewable Diesel Fuels Credit. Return software Comments and suggestions. Return software   We welcome your comments about this publication and your suggestions for future editions. Return software   You can write to us at the following address: Internal Revenue Service Individual and Specialty Forms and Publications Branch SE:W:CAR:MP:T:I 1111 Constitution Ave. Return software NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Return software Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Return software   You can email us at taxforms@irs. Return software gov. Return software Please put “Publications Comment” on the subject line. Return software You can also send us comments from www. Return software irs. Return software gov/Forms-&-Pubs/More-Information/ and select “Comment on Tax Forms and Publications”. Return software   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. Return software Useful Items - You may want to see: Publication 509 Tax Calendars Form (and Instructions) 11-C Occupational Tax and Registration Return for Wagering 637 Application for Registration (For Certain Excise Tax Activities) 720 Quarterly Federal Excise Tax Return 720X Amended Quarterly Federal Excise Tax Return 730 Monthly Tax Return for Wagers 1363 Export Exemption Certificate 2290 Heavy Highway Vehicle Use Tax Return 2290(SP) Declaración del Impuesto sobre el Uso de Vehículos Pesados en las Carreteras 4136 Credit for Federal Tax Paid on Fuels 6197 Gas Guzzler Tax 6478 Biofuel Producer Credit 6627 Environmental Taxes 8849 Claim for Refund of Excise Taxes, and Schedules 1–3, 5, 6, and 8 8864 Biodiesel and Renewable Diesel Fuels Credit Information Returns    Form 720-TO, Terminal Operator Report Form 720-CS, Carrier Summary Report   See How To Get Tax Help in chapter 17 for information about ordering forms and publications. Return software Guidance    You can find Notice 2005-4 (fuel tax guidance) on page 289 of I. Return software R. Return software B. Return software 2005-2 at www. Return software irs. Return software gov/pub/irs-irbs/irb05-02. Return software pdf. Return software Notice 2005-62 (biodiesel and aviation-grade kerosene) on page 443 of I. Return software R. Return software B. Return software 2005-35 at www. Return software irs. Return software gov/pub/irs-irbs/irb05-35. Return software pdf. Return software Notice 2005-80 (LUST, kerosene, claims by credit card issuers, and mechanical dye injection) on page 953 of I. Return software R. Return software B. Return software 2005-46 at www. Return software irs. Return software gov/pub/irs-irbs/irb05-46. Return software pdf. Return software Notice 2006-92 (alternative fuels and alternative fuel mixtures) on page 774 of I. Return software R. Return software B. Return software 2006-43 at www. Return software irs. Return software gov/pub/irs-irbs/irb06-43. Return software pdf. Return software Notice 2008-110 (biodiesel and cellulosic biofuel) on page 1298 of I. Return software R. Return software B. Return software 2008-51 at www. Return software irs. Return software gov/pub/irs-irbs/irb08-51. Return software pdf. Return software Notice 2010-68 (Alaska dyed diesel exemption) on page 576 of I. Return software R. Return software B. Return software 2010-44 at www. Return software irs. Return software gov/pub/irs-irbs/irb10-44. Return software pdf. Return software Notice 2012-27 (fractional aircraft ownership programs fuel surtax) on page 849 of I. Return software R. Return software B. Return software 2012-17 at www. Return software irs. Return software gov/pub/irs-irbs/irb12-17. Return software pdf. Return software Notice 2013-26 (fuel tax credits) on page 984 of I. Return software R. Return software B. Return software 2013-18 at www. Return software irs. Return software gov/pub/irs-irbs/irb13-18. Return software pdf. Return software T. Return software D. Return software 9604 and Notice 2012–77 (medical device tax) on pages 730 and 781, respectively, of I. Return software R. Return software B. Return software 2012-52 at www. Return software irs. Return software gov/pub/irs-irbs/irb12-52. Return software pdf. Return software T. Return software D. Return software 9602 (patient-centered outcomes research fee) on page 746 of I. Return software R. Return software B. Return software 2012-52 at www. Return software irs. Return software gov/pub/irs-irbs/irb12-52. Return software pdf. Return software Revenue Procedure 2012-41 (inflation adjustments) on page 539 of I. Return software R. Return software B. Return software 2012-45 at www. Return software irs. Return software gov/pub/irs-irbs/irb12-45. Return software pdf. Return software T. Return software D. Return software 9621 (indoor tanning services tax) on page 49 of I. Return software R. Return software B. Return software 2013-28 at www. Return software irs. Return software gov/pub/irs-irbs/irb13-28. Return software pdf. Return software Excise Taxes Not Covered In addition to the taxes discussed in this publication, you may have to report certain other excise taxes. Return software For tax forms relating to alcohol, firearms, and tobacco, visit the Alcohol and Tobacco Tax and Trade Bureau website at www. Return software ttb. Return software gov. Return software Heavy highway vehicle use tax. Return software   You report the federal excise tax on the use of certain trucks, truck tractors, and buses used on public highways on Form 2290, Heavy Highway Vehicle Use Tax Return. Return software The tax applies to highway motor vehicles with a taxable gross weight of 55,000 pounds or more. Return software Vans, pickup trucks, panel trucks, and similar trucks generally are not subject to this tax. Return software Note. Return software A Spanish version (Formulario 2290(SP)) is also available. Return software See How To Get Tax Help in chapter 17. Return software Registration of vehicles. Return software   Generally, you must prove that you paid your heavy highway vehicle use tax to register your taxable vehicle with your state motor vehicle department or to enter the United States in a Canadian or Mexican registered taxable vehicle. Return software Generally, a copy of Schedule 1 (Form 2290) is stamped by the IRS and returned to you as proof of payment. Return software    If you have questions on Form 2290, see its separate instructions, or you can call the Form 2290 call site at 1-866-699-4096 (toll free) from the United States, and 1-859-669-5733 (not toll free) from Canada and Mexico. Return software The hours of service are 8:00 a. Return software m. Return software to 6:00 p. Return software m. Return software Eastern time. Return software Wagering tax and occupational tax. Return software   The information on wagering tax can be found in the instructions for Form 730, Tax on Wagering, and Form 11-C, Occupational Tax and Registration Return for Wagering. Return software Prev  Up  Next   Home   More Online Publications