As an employer, it’s important to stay up-to-date with the latest changes in tax regulations to ensure compliance and effectively manage your fringe benefits. In this article, we will explore some key updates outlined in Publication 15-B that you need to be aware of. Let’s dive in!
Moving Expense Reimbursements
The Tax Cuts and Jobs Act suspended the exclusion for qualified moving expense reimbursements from your employee’s income for tax years beginning after 2017 and before 2026. However, there is an exception for members of the U.S. Armed Forces on active duty who move due to a permanent change of station as a result of a military order. It’s important to note that this exclusion only applies to moving expenses that could be deducted by the member if they had paid or incurred them without reimbursement. For more information on what constitutes a permanent change of station and deductible moving expenses, refer to Moving Expenses in Pub. 3, Armed Forces’ Tax Guide.
Bicycle Commuting Reimbursements
Qualified bicycle commuting reimbursements are also excluded from your employee’s income, but this exclusion has been suspended for tax years beginning after 2017 and before 2026. This means that these reimbursements will now be treated as taxable income. More details on transportation (commuting) benefits can be found in section 2 of Publication 15-B.
Withholding on Supplemental Wages
The federal income tax withholding rates on supplemental wages have been lowered for tax years beginning after 2017 and before 2026. To find out more about the withholding rates and how to deposit taxes, refer to section 4 of Publication 15-B.
Form 1099-NEC, Nonemployee Compensation
If you have paid nonemployee compensation in 2023, make sure to use Form 1099-NEC to report it. The deadline for filing the 2023 Form 1099-NEC is January 31, 2024. Be sure to submit it on time to avoid any penalties.
Additional Permitted Election Changes for Health Coverage
Notice 2014-55 expands the permitted change rules for health coverage under a cafeteria plan, allowing participants to revoke their election in certain situations. For more information on this topic, read the notice available at News Explorer Today.
Definition of Marriage
When it comes to federal tax purposes, a marriage is recognized if it is recognized by the state or territory of the United States in which it is entered into, regardless of legal residence. If two individuals are in a relationship that is considered a marriage under the laws of a foreign jurisdiction, they will be recognized as married for federal tax purposes if the relationship would be recognized as a marriage in at least one state or territory of the United States. However, registered domestic partnerships, civil unions, or similar relationships that are not considered marriages under the state or territory laws are not recognized as marriages for federal tax purposes. For more information on this topic, consult Notice 2014-1 available at News Explorer Today.
FAQs
1. Can I still exclude qualified moving expense reimbursements for my employees who are members of the U.S. Armed Forces?
Yes, the exclusion for qualified moving expense reimbursements is still available for members of the U.S. Armed Forces on active duty who move due to a permanent change of station as a result of a military order.
2. Are bicycle commuting reimbursements still excluded from an employee’s income?
No, the exclusion for qualified bicycle commuting reimbursements has been suspended for tax years beginning after 2017 and before 2026. These reimbursements will now be treated as taxable income.
3. How do I report nonemployee compensation paid in 2023?
Use Form 1099-NEC to report nonemployee compensation paid in 2023. The deadline for filing the 2023 Form 1099-NEC is January 31, 2024.
Conclusion
Staying informed about changes in tax regulations is crucial for every employer. Publication 15-B provides valuable guidance on how to navigate the complexities of fringe benefits. Make sure to familiarize yourself with the latest updates and consult the official IRS resources for more detailed information. Your compliance with these regulations will not only save you from potential penalties but also ensure a smooth operation for your business.