Individual Tax chapter 11

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  1. Name five Employer-provided Benefits that are excluded from income.
    • Accident & Health Plans
    • Cafeteria Plans (not that kind of cafeteria)
    • Dependent Care Assistance
    • Educational Assistance
    • Adoption Assistance
    • Retirement Plan Contributions
    • Meals & Lodging
    • Fringe Benefits
    • Employee Achievement Awards
    • Group Term Life Insurance Premiums
  2. How is the tax of Accident & Health Plans treated for employers and employees?
    Excluded from employee income

    Deductible by Employer
  3. How is Disability Insurance taxed for employees and employers?
    Employee: Premiums are excluded, but benefits are taxable income.

    Employer: Premiums are deductible.
  4. What is the only time disability insurance benefits are excluded from an employee's income?
    When the employee pays disability premiums with "after tax" dollars
  5. What is a cafeteria plan?
    A list of benefits that employees can pick and choose from
  6. How are cafeteria plans taxed?
    If the employee chooses fringe benefits, the benefit is excluded from gross income.

    If the employee chooses cash, the cash is included with gross income.
  7. What is the limit of the exclusion for dependent care costs provided by employers?
  8. What are an employer's requirements in order for dependent care assistance to be excludable for employees?

    The plan:
    • Must be in writing
    • Must inform employees about plan
    • Must not discriminate
    • Etc.
  9. What are the rules for an Educational Assistance Plan to be excluded from employees' income?
    • Plan cannot discriminate
    • Limitation of $5,250 per year per employee
    • Covers allowed costs
  10. What is discrimination (in tax)?
    Providing benefits to some who are in upper management, but not to normal employees.
  11. What educational costs are allowed for educational assistance exclusion?
    • Tuition
    • Books
    • Fees
    • Supplies/Equipment
    • Etc.
  12. What costs are not allowed for educational assistance plans to be excluded from employee income?
    • Meals
    • Lodging
    • Transportation

    Because everyone else has to pay taxes on living expenses; students shouldn't get preferential treatment.
  13. What are the rules forĀ Adoption Assistance Plans to be excluded from income?
    • $12,970 limit in 2013
    • Phases out for high income taxpayers
    • Plan cannot discriminate
  14. How are retirement plan contributions taxed?
    They are excluded from income until the employee pulls the money out.
  15. What are the rules for cost of meals and lodging to be excluded from an employee's income?
    • Lodging must be on site of job
    • Must be for convenience of the employer
    • Meals must be provided on premises and for convenience of employer.
  16. What section of the IRC concerns Fringe Benefits?
    Section 132
  17. What are no-additional-cost services?
    Services offered to employees for free at no additional cost to the employer.
  18. What are the rules for no-additional-cost services to be excludable from employees' services?
    • The service is normally offered to customers in the employer's ordinary course of business
    • The employer incurs no substantial additional cost
  19. In what kind of industries do employers offer no-additional-cost services?
    • Airlines
    • Hotels,
    • Amusement Parks
    • Cruise Lines
    • Etc.
  20. Under excludable income, what is a qualified employee discount?
    Goods/services offered to employees at a discount. The services must be offered in ordinary course of business.
  21. How much is a qualified employee discount excluded from gross income?
    Image Upload 1
  22. What is a working condition fringe benefit?
    • = The value of a company care, company cell phones, company lap tops, etc.
    • Excluded from employee's gross income.
  23. Can working condition fringe benefits be used for personal use, and be excluded from income?
  24. Employers offer employees coffee, picnics, copy machine use, and other small benefits. What is this called?
    De Minimis Fringe
  25. Are De Minimis Fringe benefits excluded from income? Why?
    Yes, because they are of small value, and the administrative burdens of tracking are too high.
  26. What is the Qualified Transportation Fringe?
    It is employer provided transit passes, parking passes, bicycle expenses, etc.
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Individual Tax chapter 11
Individual Tax chapter 11
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