Benefits
Fringe benefits are a type of compensation a company may offer to an employee or person performing services for the company and are often used to recruit top job candidates and motivate employees.
The dollar limitations applicable for income exclusion (and deduction) purposes vary, depending on whether the awards are made under a qualified plan. An employee achievement award plan must be in writing to be considered a qualified plan. It may not separate in favor of highly compensated employees regarding the plan or its actual results.
The annual dollar limit awarded to an individual employee on a qualified plan is $1,600 per year. This limit applies to the combined value of length–of–service and safety awards, as well as the value of any employee achievement awards made under plans that are not qualified. Additionally, the average cost of an award may not exceed $400. The average cost is determined by dividing the total cost of all achievement awards for the year by the number of awards presented, disregarding any awards of nominal cost.
A lower limit of $400 per year applies to awards made under a not qualified program. For nonqualified plan awards, the income exclusion and deduction limit are $400 per employee per year. The $1,600 and $400 deduction limits also apply in an employee achievement award made by a partnership. These limits apply to the partnership and each member.
To be excluded from income under the employee achievement award rules, a length-of-service award may not be granted for fewer than five years of service. Moreover, excludable awards may not be presented more than every five years. However, after the first five years, length-of-service awards given more often than at five-year intervals may qualify for exclusion under the Internal Revenue Code Section 132(e)(1) exclusion for de minimis fringe benefits.
Retirement gifts constitute length-of-service awards. They are subject to the same requirements for income exclusion as other employee achievement awards.
An award given to a worker for safety accomplishments is entitled to treatment as an employee achievement award if the following conditions are met:
Only full-time employees with a minimum of one year of service would be eligible for safety achievement awards. Additionally, if more than 10% of eligible employees receive safety awards within a year, only the first 10% would be entitled to the income exclusion. If all safety awards were presented simultaneously, thus making it difficult or impossible to determine who fell within the first 10 percent, no employee would be permitted to exclude the cost of the award from income. In such situations, the maximum deduction the employer could take would be the cost of the award multiplied by 10% of the eligible employees.
Fringe benefits are a type of compensation a company may offer to an employee or person performing services for the company and are often used to recruit top job candidates and motivate employees.
Geocoding is useful for a multitude of different applications, and especially important in payroll for determining the precise taxes that apply to individual employees.
Local taxes are income taxes imposed by local governments. Separate from federal and state income tax, local taxes generally are imposed on people who live or work in the locality.
Multi-state payroll refers to when an employee lives in one state but works in another and additional considerations must be considered when determining taxes.