This article outlines the reporting requirements for fringe benefits on 2023 information returns, specifically focusing on the W-2, 941, and 940 forms. Here are key points:

  1. Taxable Fringe Benefits:
  • Include cash items and some noncash items (e.g., bonuses, vacation pay, season tickets).
  • Generally subject to FIT, FITW, FICA, and FUTA.
  • Report on W-2, Boxes 1, 3, 5, and 15-20.
  1. Tax-Free Fringe Benefits:
  • No-additional-cost services, qualified employee discounts, working-condition fringes, de minimis fringes, and qualified Retirement Planning Services are exempt.
  • Adoption assistance up to $15,950 is FIT/FITW exempt but FICA/FUTA-taxable.
  1. Employer Loans:
  • Generally nontaxable up to $10,000 daily aggregate loan balance.
  • Report on W-2 if outstanding interest-free or below-market loan exceeds $10,000.
  1. Accountable-Plan Expense Advances:
  • Not subject to FIT, FITW, FICA, or FUTA if provided within 30 days before the expense is incurred.
  • Report unsubstantiated amounts on periodic statements.
  1. Nonaccountable-Plan Expense Reimbursements/Advances:
  • Subject to FIT, FITW, FICA, and FUTA upon payment.
  • Report on W-2, Boxes 1, 3, and 5.
  1. Dependent-Care Benefits:
  • Exempt contributions up to $5,000 for joint filers and $2,500 for single filers.
  • Report benefits in Box 10; amounts over limits in Boxes 1, 3, and 5.
  1. Per Diems:
  • Report taxable portion exceeding IRS rates in Boxes 1, 3, and 5.
  • Include IRS rate amount in Box 12, Code L.
  1. Group-Term Life (GTL) Insurance:
  • Up to $50,000 is exempt; report in Boxes 1, 3, 5, and 12 (Code C).
  • GTL provided after termination reported in Box 12 (Code M) and Box 12, SS tax not withheld (Code N).
  1. Taxable Third-Party Sick Pay:
  • Reported on W-2 with details in Boxes 1, 2, 3, 4, 5, 6, 12 (Code J), and W-3, Box 14.
  1. Employer-Provided Vehicles:
  • If reporting 100% of employee use as wages, include in Box 1 and either Box 14 or a separate statement.
  1. Qualified Moving Expense Reimbursements:
  • Tax-free for military personnel within 30 days of relocation; report on W-2, Box 12, Code P.
  • Taxable reimbursements subject to FIT, FITW, FICA, and FUTA; report on the W-2.