Date: January 25, 2016
According to Benefits Partners, the IRS recently issued the 2016 version of Employer’s Tax Guide to Fringe Benefits. The publication contains information for employers on the tax treatment of certain fringe benefits, including accident and health coverage, adoption assistance, dependent care assistance, educational assistance, discount programs, group term life insurance, moving expense reimbursements, HSAs and transportation benefits.
The 2016 version is substantially similar to the 2015 version, but includes the 2016 dollar amounts for various benefit limits and definitions, including the monthly limits for qualified transportation plans, the maximum out-of-pocket expense limits for high deductible health plans and the maximum contributions allowed toward an HSA. Specifically, the publication states that—as a result of the Consolidated Appropriations Act of 2016—the monthly transit benefit exclusion increased from $130 to $250 per participating employee for the period of Jan. 1, 2015, through Dec. 31, 2015. The publication states that employers will be provided instructions on how to correct the social security and Medicare taxes on the excess transit benefits in future guidance.
In addition, the publication states that for 2016, the monthly exclusion for qualified parking is $255, the monthly exclusion for commuter highway vehicle transportation and transit passes is $255 and salary reduction contributions for a health FSA are limited to $2,550 for plan years beginning in 2016. Finally, the publication states that the business mileage rate for 2016 is 54 cents per mile.
Publication 15B is a useful resource for employers on the tax treatment of fringe benefits. Employers should familiarize themselves with the publication, as well as other IRS publications referenced in Publication 15B which further describe and define certain aspects of those benefits.