CPP / FPC Study Group WELCOME ! Please sign in Review of Answers Presentation Material Review Test of Section 2

It’s Test Time ! 10 minutes ! Federal and State Wage and Hour Laws

Questions ?

THE EXAM Any Questions ? Concerns ?

Section 3

Overview Gross Income Fringe Benefits Employer Provided Benefits Other Payments Withholding and Reporting Taxes Questions

Gross Income –Included wages and benefits –Excluded benefits Income and Employment Taxes Fair Market Value –IFBA = FMV – (EPA + AEL)

Fringe Benefits Nontaxable Fringe Benefits –No-additional-cost-services –Qualified Employer Discounts –Working Condition Fringe –De Minimis Fringe –Qualified Transportation –On-Premises Athletic Facilities –Qualified Retirement Planning Services –Qualified Moving Expense Reimbursement

Personal Use of Employer Provided Vehicles Exception to Personal Use –De Minimis –Qualified Non-personal Use –Automobile Salespersons

Accounting for Use – Valuation Methods –General Valuation Method –Special Valuation Method –Commuting Valuation Method –Annual Lease Valuation Method –Vehicle cents-per-mile Method Personal Use of Employer Provided Vehicles Cont’d

Personal Use of Employer Provided Aircraft –General Valuation Rule –Non-commercial Flight Valuation Rule Free or Discounted Commercial Flights Discounts on Property or Services Club Memberships –Working Condition Fringe? –Club vs. Organization Other Fringe Benefits

Employer Provided Benefits Life Insurance –Group-term life insurance –Whole life insurance –Split dollar life insurance –Owners

Moving Expenses Deductibility –Distance Test –Time Test Deductible (qualified, nontaxable) moving expenses –Transportation of Household Goods –Expenses of traveling from old residence to new residence (excluding meals)

Nondeductible (nonqualified, taxable) moving expenses –Meals while in transit –House hunting trips –Real estate expenses Reporting of moving expenses –Deductible –Nondeductible Moving Expenses Cont’d

Educational Assistance Job-Related Non Job-Related –$5,250 exclusion Group Legal Services

Business Travel Expenses Away from home Temporary Daily Transportation Expenses Accountable Plan –Business Connection –Substantiation –Returning Excess Amounts

Nonaccountable Plan Frequent Flyer Miles Substantiation vs. Per Diem allowance Spousal and family travel expenses Business Travel Expenses Cont’d

Employer Provided Meals and Lodging Employer Provided Meals –Furnished on employer premise –For the convenience of the employer Employer Provided Lodging –On the employer premises –For the convenience of the employer –Required as a condition of employment

Adoption Assistance Dollar Limitation Income Limitation Eligible Child Qualified Expenses Program Requirements W2, Box 12, Code T

Break 10 minutes!

Other Payments Advances and Overpayments Awards and Prizes –Length of Service –Safety Achievement –Civic and Charitable Awards –Prizes for Retail Salespeople Back Pay Awards

Bonuses Commissions Conventions Death Benefits Dependent Care Assistance –$5,000 exclusion limitation Directors’ Fees Disaster Relief Payments Equipment Allowance Other Payments Cont’d

Gifts Golden Parachute Payments Guaranteed Wage Payments Jury Duty Pay Leave Sharing Plans Loans to Employees Military Pay Outplacement Services Retroactive Wage Payments Security Provided to Employees Other Payments Cont’d

Severance or Dismissal Pay Strike Benefits Supplemental Unemployment Benefits Tips Uniform Allowances Vacation Pay Wages Paid After Death –In same year –In subsequent year Other Payments Cont’d

Stocks and Stock Options –Stock as compensation –Stock Options –Incentive Stock Options –Stock Purchase Plan –Non Qualified Stock Options –Tax Treatment –Written Statement Other Payments Cont’d

Employer Paid Taxes (Gross-Up) Gross Amount of Earnings = Desired Net Payment / (100% - Total Tax %) 1. Gross Amount of Earnings = $5,000 / (100% - Total Tax %) 2. 25% = Federal Income Tax Supplemental Tax Rate 6.2% = Social Security 1.45% = Medicare 32.65% = Total Tax % 3. Gross Amount of Earnings = $5,000 / (100% %) 4. Gross Amount of Earnings = $5,000 / 67.35% Desired Net = $5, Gross Amount of Earnings = $7,423.90

Withholding and Reporting for Employer Provided Benefits Cash Fringe Benefits Non Cash Fringe Benefits –Withholding Methods –Imputed Income –Gross Up –Special Accounting Rule –W2 Requirements

Questions ?

Discussion Time  Prior Topics  Topic this week  Homework Problems Any questions on:

Next Class Topic : Section 4 Health, Accident and Retirement Plans

It’s Calculation Time!