Chapter 4 – Employee Benefits

Chapter 4 – Employee Benefits - Chapter 4...

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Chapter 4 – Employee Benefits General rule: payments in any form to employees are gross income as compensation for services, unless excluded by statute.
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Fringe Benefits Although technically, these fit the standard of gross income, either through statute or long-standing administrative practice, these amounts were generally excluded from an employee’s gross income. Congress enacted §132 in 1984 to statutorily codify what benefits are excludible. General rule now: if there is no statute saying it is exempt, it’s not exempt.
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Types of Exclusions under Section 132 §132(a)(1) – No additional cost services. 3 criteria to meet this exclusion: Services must be offered for sale to customers in the same line of business in which the employee is performing services ; Employer incurs no additional substantial costs in performing the services provided to the employee; In the case of highly compensated employees, the services are provided on a non-discriminatory basis to all employees.
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Types of Exclusions under Section 132 Examples of §132(a)(1) exclusions: Hotel rooms (as long as you are not booting out paying customers) Airline seats (see same rule) Free telephone service to those working in the telephone line of business
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Types of Exclusions under Section 132 §132(a)(2) – Qualified Employee Discounts
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Chapter 4 – Employee Benefits - Chapter 4...

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