This Week’s White Paper–Employee Achievement Awards

Taxing awards to employees is always a tricky business.  Is it taxable or not?  If I take taxes out will that diminish the award or the employee’s moral over receiving it? Unfortunately, we sometimes can’t take that into consideration.  The IRS says it is taxable, so we tax.  But sometimes the IRS says it is not taxable.  Case in point, employee achievement awards. Given for length of service or safety, these awards can be given without adding it as income to the employee’s wages if done correctly. Of course, no cash or gift certificates. It must be tangible personal property like a pin for years of service or a plaque for safety.  Our white paper this week deals with when to tax and when not to tax employee achievement awards. We hope you find the information useful.  You can request your copy of our white paper on our website.

 

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Company Cars Part 2

Our free white paper this week is the second of our two-parter on the personal use of a company car.  This time we are doing the math.  Yes unfortunately, math is involved when having to determine the taxable wages.  But it is not the only thing needed to do the computations. Vehicle values and vehicle logs are also needed, depending on the method chosen.  You also need to determine the proper method based on the value of the car and the status of the employee.  We hope you find the white paper useful. It can be requested on our website.

 

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Taxation of Wellness Programs

The Office of Chief Counsel of the Internal Revenue Service has issued a memorandum on “Tax Treatment of Wellness Program Benefits and Employer Reimbursement of Premiums Provided Pre-tax Under a Section 125 Cafeteria Plan”.  Not quite a catchy title I admit but it does contain guidance that is useful.  The two questions  that were at issue are as follows:

  1. May an employer exclude from an employee’s income under section 105 or section 106 cash rewards paid to an employee for participating in a wellness program?
  2.  May an employer exclude from an employee’s income under section 105 or section 106 reimbursements of premiums for participating in a wellness program if the premiums for the wellness program were originally made by salary reduction through a section 125 cafeteria plan?

The conclusion reached by the Chief Counsel was no on both counts. 1. An employer may not exclude from an employee’s gross income payments of cash rewards for participating in a wellness program. 2. An employer may not exclude from an employee’s gross income reimbursements of premiums for participating in a wellness program if the premiums for the wellness program were originally made by salary reduction through a section 125 cafeteria plan.

For those of you who need to research this closer I included the link to the memorandum issued on April 14, 2016 and released on May 27, 2016.  They review three different situations and then provide the law and analysis you may need if this affects any benefits you are offering.

 

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Wedding Season and Payroll

I just finished reading the latest blog from the Social Security Administration on the beginning of the “wedding season”. Now what do weddings have to do with payroll? Well as the blog pointed out amid all the wedding planning and gift buying there still remains one simple fact.  A wedding often means a name change is in order.  This is often overlooked by the happy couple.  Although no law requires that the woman take the man’s name, it is still a common practice after a heterosexual marriage ceremony. In fact, now a days, name changes are possible in any number of combinations. Either participant may make a name change or the couple may want to create a new name.  But as the SSA points out if either  of the wedding couple are legally changing their name, they need to apply for a replacement Social Security card to reflect the new name.  How does this involve payroll? Payroll needs to make sure that all employees understand that name changes will not be accepted until a new Social Security card is presented. Reminding employees that if the name change is done on the payroll but not done with the SSA, any future earnings reported to the SSA will not be put into the employee’s account but rather go into a suspense account until the name change is recorded with the SSA. It might be a good idea to remind employees when a wedding is made public at work or just in general.  Company newsletters, posters and reminders are all ways to get the word out to employees. Then all payroll needs to do is figure out what to get the happy couple.

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