Any fringe benefit you provide is taxable and must be included in
the recipient's pay unless the law specifically excludes it. Chapter 2
discusses the exclusions that apply to certain fringe benefits. Any
benefit not excluded under the rules discussed in chapter 2
is
taxable.
Including taxable benefits in pay.
You must include in a recipient's pay the amount by which the value
of a fringe benefit is more than the sum of the following amounts.
- Any amount the law excludes from pay.
- Any amount the recipient paid for the benefit.
The rules used to determine the value of a fringe benefit are
discussed in chapter 3.
If the recipient of a taxable fringe benefit is your employee, the
benefit is subject to employment taxes and must be reported on Form
W-2. However, you can use special rules to withhold, deposit,
and report the employment taxes. Publication 15 and Publication 15-A discuss these rules.
If the recipient of a taxable fringe benefit is not your employee,
the benefit is not subject to employment taxes. However, you may have
to report it on one of the following information returns.
For more information, see the instructions for the forms
listed above.
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