On January 27, 2021, the IRS released the 2021 draft Publication 15-B, the Employer’s Tax Guide to Fringe Benefits. This publication provides an overview of the taxation and exclusion rules applicable to employee benefits such as accident and health benefits, dependent care assistance, health savings accounts, and group term life insurance coverage. The guide also includes the related valuation, withholding and reporting rules.
The IRS updates Publication 15-B each year to incorporate any recent administrative, reporting or regulatory changes. The revisions also include applicable dollar maximums for certain tax-favored benefits for the current year.
The 2020 updates include the introduction of a new Form 1099-NEC for reporting non-employee compensation paid in 2020. Employers reporting non-employee compensation paid in 2020 should use Form 1099-MISC, which is due February 1, 2021.
The business mileage rate for 2021 is 56 cents per mile, which can be used to reimburse an employee for business use of a personal vehicle, and under certain conditions, to value the personal use of a vehicle provided to an employee. The 2021 monthly exclusion for qualified parking is $270 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $270. For plan years beginning in 2021, the maximum salary reduction permitted for a health FSA under a cafeteria plan is $2,750.
Employers should be aware of the availability of the updated publication and most recent modifications.
Source: NFP BenefitsPartners