IRS warns: You could be on the hook for those parking benefits
Some companies use tax-free fringe benefits, like complimentary parking, transit passes or tokens, to boost employee morale without straining the company’s bottom line.
If you’re one of those companies, check out this latest update from the feds.
The IRS is “reminding” employers that free parking could quickly morph into a taxable fringe benefit for many businesses and their employees.
Here’s a quick primer: Under IRS rules for 2014, employers can provide:
• “qualified” parking to employees worth up to $250 per month, and
• transportation passes or tokens up to $130 a month.
“Qualified” parking is defined by the IRS as parking provided on the property that the employer owns or leases, parking the employer pays for or parking expenses that are reimbursed to the employee.
If an employer provides a parking benefit valued above $250 per month and the employee pays nothing for it, that value must be included in the employee’s wages for income and employment tax purposes.
For the most recent Travel & Expesnes regs from IRS (released late last year) go to the agency’s website here.
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