How to report fringe benefits on the W-2

Taxable fringe benefits include cash (bonuses, severance or vacation pay) and noncash gifts such as season tickets to sporting events and gift certificates or gift cards. Taxable fringes are subject to FIT, FITW, FICA, FUTA, and some state and local taxes. Report on the W-2 in Boxes 1, 3, 5, and 15-20.

Exempt fringe benefits that are not reported on the W-2 and not subject to FIT, FITW or FUTA include:

·         no-additional-cost services (e.g., free hotel rooms for hotel employees);

·         qualified employee discounts for merchandise—if the discount does not exceed the gross profit percentage;

·         qualified employee discounts for services, as long as the discount does not exceed 20%;

·         working-condition fringes (e.g., reimbursed or paid-for job-related training, long-distance calls, and faxes); and

·         use of employer-owned or -leased athletic facilities (if not owned or leased by the employer, benefit is taxable) and de minimus fringes (e.g., a holiday turkey or ham).

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.