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File 2012 Taxes Late Online

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File 2012 Taxes Late Online

File 2012 taxes late online Car Expenses Table of Contents Introduction Depreciation of CarSpecial Depreciation Allowance Depreciation Limit Amended Return Election Not To Claim Special Allowance If you purchased a car after September 10, 2001, for use in your business (or as an employee) and figure your deductible expenses using the actual car expense method, new law contains provisions that may affect your depreciation deduction for that car. File 2012 taxes late online Publication 463, Travel, Entertainment, Gift, and Car Expenses, contains information on figuring depreciation on your car. File 2012 taxes late online However, Publication 463 does not contain the new provisions because it was printed before the law was enacted. File 2012 taxes late online The new provisions are in the Supplement to Publication 463, which is reprinted below. File 2012 taxes late online Supplement to Publication 463 Travel, Entertainment, Gift, and Car Expenses   Introduction This supplemental publication is for taxpayers who purchased a car for business purposes after September 10, 2001, and figure their deductible expenses, including a deduction for depreciation, using the actual car expense method. File 2012 taxes late online After Publication 463 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. File 2012 taxes late online Certain provisions of this new law may reduce your taxes for 2001. File 2012 taxes late online The new law contains the following provisions. File 2012 taxes late online A new depreciation deduction, the special depreciation allowance. File 2012 taxes late online An increase in the limit on depreciation for any car for which you claim the new special depreciation allowance. File 2012 taxes late online If you have already filed your 2001 return, you may wish to file an amended return to claim any of these benefits. File 2012 taxes late online See Amended Return, later. File 2012 taxes late online Depreciation of Car If you used the actual car expense method to figure your deduction for a car you own and use in your business (or as an employee), you generally can claim a depreciation deduction. File 2012 taxes late online However, there is a limit on the depreciation deduction you can take for your car each year. File 2012 taxes late online See Depreciation Limit later. File 2012 taxes late online Special Depreciation Allowance The new law allows you to claim a special depreciation allowance. File 2012 taxes late online This special allowance is a deduction equal to 30% of the depreciable basis of qualified property. File 2012 taxes late online You figure the amount of the special depreciation allowance after any section 179 deduction you choose to claim, but before figuring your regular depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS). File 2012 taxes late online See Depreciation Deduction under Actual Car Expenses in chapter 4 of Publication 463 for information about MACRS. File 2012 taxes late online You can claim the special depreciation allowance only for the year the qualified property is placed in service. File 2012 taxes late online Qualified property. File 2012 taxes late online   Qualified property includes a car (any four-wheeled vehicle, including a truck or van not more than 6,000 pounds, that is made primarily for use on public streets, roads, and highways) that meets all of the following requirements. File 2012 taxes late online You bought it new. File 2012 taxes late online You bought it after September 10, 2001. File 2012 taxes late online (But a car is not qualified property if a binding written contract for you to buy the car was in effect before September 11, 2001. File 2012 taxes late online ) You began using it for business after September 10, 2001, and used it more than 50% in a qualified business use. File 2012 taxes late online Example. File 2012 taxes late online Bob bought a new car on October 15, 2001, for $20,000 and placed it in service immediately, using it 75% for business. File 2012 taxes late online Bob's car is qualified property. File 2012 taxes late online Bob chooses not to take a section 179 deduction for the car. File 2012 taxes late online He does claim the new special depreciation allowance. File 2012 taxes late online Bob first must figure the car's depreciable basis, which is $15,000 ($20,000 × . File 2012 taxes late online 75). File 2012 taxes late online He then figures the special depreciation allowance of $4,500 ($15,000 × . File 2012 taxes late online 30). File 2012 taxes late online The remaining depreciable basis of $10,500 ($15,000 - $4,500) is depreciated using MACRS (200% declining balance method, half-year convention) and results in a deduction of $2,100 ($10,500 × . File 2012 taxes late online 20), for a total depreciation deduction for 2001 of $6,600 ($4,500 + $2,100). File 2012 taxes late online However, Bob's depreciation deduction is limited to $5,745 ($7,660 × . File 2012 taxes late online 75), as discussed next. File 2012 taxes late online Depreciation Limit The limit on your depreciation deduction for 2001 is increased to $7,660 for a car that is qualified property (defined above) and for which you claim the special depreciation allowance. File 2012 taxes late online The limit is increased to $23,080 if the car is an electric car. File 2012 taxes late online The section 179 deduction is treated as depreciation for purposes of this limit. File 2012 taxes late online If you use a car less than 100% in your business or work, the limit is $7,660 (or $23,080 for an electric car) multiplied by the percentage of business and investment use during the year. File 2012 taxes late online For cars that do not qualify for (or for which you choose not to claim) the special depreciation allowance, the limit remains $3,060 ($9,280 for electric cars). File 2012 taxes late online Amended Return If you filed your 2001 calendar year return before June 1, 2002, and did not claim the new special depreciation allowance for a qualified car, you can claim it by filing an amended return on Form 1040X, Amended U. File 2012 taxes late online S. File 2012 taxes late online Individual Income Tax Return, by April 15, 2003. File 2012 taxes late online At the top of the Form 1040X, print “Filed pursuant to Revenue Procedure 2002–33. File 2012 taxes late online ” If you are an employee, attach Form 2106, Employee Business Expenses (revised March 2002). File 2012 taxes late online If you are self-employed, attach Form 4562, Depreciation and Amortization (revised March 2002). File 2012 taxes late online Or, you can claim the special depreciation allowance by filing Form 3115, Application for Change in Accounting Method, with your 2002 return. File 2012 taxes late online For details, see Revenue Procedure 2002–33. File 2012 taxes late online (But, filing Form 1040X for 2001 enables you to claim the special allowance earlier than attaching Form 3115 to your 2002 return. File 2012 taxes late online ) You cannot claim the special depreciation allowance on an amended return (or by using Form 3115) if you made, or are treated as having made, the election not to claim it described later. File 2012 taxes late online Example. File 2012 taxes late online The facts are the same as in the previous example except that Bob filed his original 2001 income tax return on April 15, 2002, and claimed a $3,000 ($20,000 x . File 2012 taxes late online 75 x . File 2012 taxes late online 20) depreciation deduction for his new car using MACRS. File 2012 taxes late online Bob now wishes to claim the special depreciation allowance for his new car on an amended 2001 return. File 2012 taxes late online Bob, who is an employee, files Form 1040X, by April 15, 2003, with an updated Form 2106 (revised March 2002) attached, increasing his total depreciation deduction to $5,745, as figured in the earlier example. File 2012 taxes late online Bob's new filled-in Form 2106 is shown later. File 2012 taxes late online Election Not To Claim Special Allowance You can elect not to claim the special depreciation allowance for a car by making a statement attached to, or written on, your return indicating that you are electing not to claim the special depreciation allowance for 5-year property. File 2012 taxes late online As a general rule, you must make this election by the due date (including extensions) of your return. File 2012 taxes late online You can have an automatic extension of 6 months from the due date of your return (excluding extensions) to make the election with an amended return. File 2012 taxes late online To get this extension, you must have filed your original return by the due date (including extensions). File 2012 taxes late online At the top of the statement, print “Filed pursuant to section 301. File 2012 taxes late online 9100–2. File 2012 taxes late online ” If you elect not to claim the special depreciation allowance for a car, you cannot claim it for any other 5-year property placed in service during the same year. File 2012 taxes late online Unless you elect (or are treated as electing) not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. File 2012 taxes late online Deemed election for return filed before June 1, 2002. File 2012 taxes late online   If you did not make the election not to claim the special depreciation allowance in the time and manner described above, you will still be treated as electing not to claim it if all of the following apply. File 2012 taxes late online You filed your 2001 return before June 1, 2002. File 2012 taxes late online You claimed depreciation on your return but did not claim the special depreciation allowance. File 2012 taxes late online You did not file an amended 2001 return by April 15, 2003, or a Form 3115 with your 2002 return, to claim the special depreciation allowance. File 2012 taxes late online Form 2106, Page 1, for Bob Smith Form 2106, Page 2, for Bob Smith Prev  Up  Next   Home   More Online Publications
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File 2012 taxes late online Publication 15-B - Main Content Table of Contents 1. File 2012 taxes late online Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. File 2012 taxes late online Fringe Benefit Exclusion RulesAccident and Health Benefits Achievement Awards Adoption Assistance Athletic Facilities De Minimis (Minimal) Benefits Dependent Care Assistance Educational Assistance Employee Discounts Employee Stock Options Employer-Provided Cell Phones Group-Term Life Insurance Coverage Health Savings Accounts Lodging on Your Business Premises Meals Moving Expense Reimbursements No-Additional-Cost Services Retirement Planning Services Transportation (Commuting) Benefits Tuition Reduction Working Condition Benefits 3. File 2012 taxes late online Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. File 2012 taxes late online Rules for Withholding, Depositing, and ReportingTransfer of property. File 2012 taxes late online Amount of deposit. File 2012 taxes late online Limitation. File 2012 taxes late online Conformity rules. File 2012 taxes late online Election not to withhold income tax. File 2012 taxes late online How To Get Tax Help 1. File 2012 taxes late online Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. File 2012 taxes late online For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. File 2012 taxes late online Performance of services. File 2012 taxes late online   A person who performs services for you does not have to be your employee. File 2012 taxes late online A person may perform services for you as an independent contractor, partner, or director. File 2012 taxes late online Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services. File 2012 taxes late online Provider of benefit. File 2012 taxes late online   You are the provider of a fringe benefit if it is provided for services performed for you. File 2012 taxes late online You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. File 2012 taxes late online For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care. File 2012 taxes late online Recipient of benefit. File 2012 taxes late online   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. File 2012 taxes late online That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. File 2012 taxes late online For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. File 2012 taxes late online Are Fringe Benefits Taxable? Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. File 2012 taxes late online Section 2 discusses the exclusions that apply to certain fringe benefits. File 2012 taxes late online Any benefit not excluded under the rules discussed in section 2 is taxable. File 2012 taxes late online Including taxable benefits in pay. File 2012 taxes late online   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. File 2012 taxes late online Any amount the law excludes from pay. File 2012 taxes late online Any amount the recipient paid for the benefit. File 2012 taxes late online The rules used to determine the value of a fringe benefit are discussed in section 3. File 2012 taxes late online   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, Wage and Tax Statement. File 2012 taxes late online However, you can use special rules to withhold, deposit, and report the employment taxes. File 2012 taxes late online These rules are discussed in section 4. File 2012 taxes late online   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. File 2012 taxes late online However, you may have to report the benefit on one of the following information returns. File 2012 taxes late online If the recipient receives the benefit as: Use: An independent contractor Form 1099-MISC, Miscellaneous Income A partner Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. File 2012 taxes late online For more information, see the instructions for the forms listed above. File 2012 taxes late online Cafeteria Plans A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. File 2012 taxes late online If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. File 2012 taxes late online Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. File 2012 taxes late online However, a cafeteria plan can include a qualified 401(k) plan as a benefit. File 2012 taxes late online Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. File 2012 taxes late online Qualified benefits. File 2012 taxes late online   A cafeteria plan can include the following benefits discussed in section 2. File 2012 taxes late online Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). File 2012 taxes late online Adoption assistance. File 2012 taxes late online Dependent care assistance. File 2012 taxes late online Group-term life insurance coverage (including costs that cannot be excluded from wages). File 2012 taxes late online Health savings accounts (HSAs). File 2012 taxes late online Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. File 2012 taxes late online Benefits not allowed. File 2012 taxes late online   A cafeteria plan cannot include the following benefits discussed in section 2. File 2012 taxes late online Archer MSAs. File 2012 taxes late online See Accident and Health Benefits in section 2. File 2012 taxes late online Athletic facilities. File 2012 taxes late online De minimis (minimal) benefits. File 2012 taxes late online Educational assistance. File 2012 taxes late online Employee discounts. File 2012 taxes late online Employer-provided cell phones. File 2012 taxes late online Lodging on your business premises. File 2012 taxes late online Meals. File 2012 taxes late online Moving expense reimbursements. File 2012 taxes late online No-additional-cost services. File 2012 taxes late online Transportation (commuting) benefits. File 2012 taxes late online Tuition reduction. File 2012 taxes late online Working condition benefits. File 2012 taxes late online It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). File 2012 taxes late online $2,500 limit on a health flexible spending arrangement (FSA). File 2012 taxes late online   For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. File 2012 taxes late online For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. File 2012 taxes late online   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). File 2012 taxes late online While cafeteria plans generally must be amended on a prospective basis, an amendment that is adopted on or before December 31, 2014, may be made effective retroactively, provided that in operation the cafeteria plan meets the limit for plan years beginning after December 31, 2012. File 2012 taxes late online A cafeteria plan that does not limit health FSA contributions to the dollar limit is not a cafeteria plan and all benefits offered under the plan are includible in the employee's gross income. File 2012 taxes late online   For more information, see Notice 2012-40, 2012-26 I. File 2012 taxes late online R. File 2012 taxes late online B. File 2012 taxes late online 1046, available at www. File 2012 taxes late online irs. File 2012 taxes late online gov/irb/2012-26_IRB/ar09. File 2012 taxes late online html. File 2012 taxes late online Employee. File 2012 taxes late online   For these plans, treat the following individuals as employees. File 2012 taxes late online A current common-law employee. File 2012 taxes late online See section 2 in Publication 15 (Circular E) for more information. File 2012 taxes late online A full-time life insurance agent who is a current statutory employee. File 2012 taxes late online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 2012 taxes late online Exception for S corporation shareholders. File 2012 taxes late online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File 2012 taxes late online A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 2012 taxes late online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. File 2012 taxes late online Plans that favor highly compensated employees. File 2012 taxes late online   If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. File 2012 taxes late online A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. File 2012 taxes late online   A highly compensated employee for this purpose is any of the following employees. File 2012 taxes late online An officer. File 2012 taxes late online A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. File 2012 taxes late online An employee who is highly compensated based on the facts and circumstances. File 2012 taxes late online A spouse or dependent of a person described in (1), (2), or (3). File 2012 taxes late online Plans that favor key employees. File 2012 taxes late online   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. File 2012 taxes late online A plan favors key employees if more than 25% of the total of the nontaxable benefits you provide for all employees under the plan go to key employees. File 2012 taxes late online However, a plan you maintain under a collective bargaining agreement does not favor key employees. File 2012 taxes late online   A key employee during 2014 is generally an employee who is either of the following. File 2012 taxes late online An officer having annual pay of more than $170,000. File 2012 taxes late online An employee who for 2014 is either of the following. File 2012 taxes late online A 5% owner of your business. File 2012 taxes late online A 1% owner of your business whose annual pay was more than $150,000. File 2012 taxes late online Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. File 2012 taxes late online Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. File 2012 taxes late online Eligible employer. File 2012 taxes late online   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. File 2012 taxes late online If your business was not in existence throughout the preceding year, you are eligible if you reasonably expect to employ an average of 100 or fewer employees in the current year. File 2012 taxes late online If you establish a simple cafeteria plan in a year that you employ an average of 100 or fewer employees, you are considered an eligible employer for any subsequent year as long as you do not employ an average of 200 or more employees in a subsequent year. File 2012 taxes late online Eligibility and participation requirements. File 2012 taxes late online   These requirements are met if all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate and each employee eligible to participate in the plan may elect any benefit available under the plan. File 2012 taxes late online You may elect to exclude from the plan employees who: Are under age 21 before the close of the plan year, Have less than 1 year of service with you as of any day during the plan year, Are covered under a collective bargaining agreement, or Are nonresident aliens working outside the United States whose income did not come from a U. File 2012 taxes late online S. File 2012 taxes late online source. File 2012 taxes late online Contribution requirements. File 2012 taxes late online   You must make a contribution to provide qualified benefits on behalf of each qualified employee in an amount equal to: A uniform percentage (not less than 2%) of the employee’s compensation for the plan year, or An amount which is at least 6% of the employee’s compensation for the plan year or twice the amount of the salary reduction contributions of each qualified employee, whichever is less. File 2012 taxes late online If the contribution requirements are met using option (2), the rate of contribution to any salary reduction contribution of a highly compensated or key employee can not be greater than the rate of contribution to any other employee. File 2012 taxes late online More information. File 2012 taxes late online   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. File 2012 taxes late online 2. File 2012 taxes late online Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. File 2012 taxes late online These rules exclude all or part of the value of certain benefits from the recipient's pay. File 2012 taxes late online The excluded benefits are not subject to federal income tax withholding. File 2012 taxes late online Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2. File 2012 taxes late online This section discusses the exclusion rules for the following fringe benefits. File 2012 taxes late online Accident and health benefits. File 2012 taxes late online Achievement awards. File 2012 taxes late online Adoption assistance. File 2012 taxes late online Athletic facilities. File 2012 taxes late online De minimis (minimal) benefits. File 2012 taxes late online Dependent care assistance. File 2012 taxes late online Educational assistance. File 2012 taxes late online Employee discounts. File 2012 taxes late online Employee stock options. File 2012 taxes late online Employer-provided cell phones. File 2012 taxes late online Group-term life insurance coverage. File 2012 taxes late online Health savings accounts (HSAs). File 2012 taxes late online Lodging on your business premises. File 2012 taxes late online Meals. File 2012 taxes late online Moving expense reimbursements. File 2012 taxes late online No-additional-cost services. File 2012 taxes late online Retirement planning services. File 2012 taxes late online Transportation (commuting) benefits. File 2012 taxes late online Tuition reduction. File 2012 taxes late online Working condition benefits. File 2012 taxes late online See Table 2-1, later, for an overview of the employment tax treatment of these benefits. File 2012 taxes late online Table 2-1. File 2012 taxes late online Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. File 2012 taxes late online ) Treatment Under Employment Taxes Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal Unemployment (FUTA) Accident and health benefits Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement. File 2012 taxes late online Exempt, except for certain payments to S corporation employees who are 2% shareholders. File 2012 taxes late online Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). File 2012 taxes late online Adoption assistance Exempt1,3 Taxable Taxable Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children and the facility is operated by the employer on premises owned or leased by the employer. File 2012 taxes late online De minimis (minimal) benefits Exempt Exempt Exempt Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return). File 2012 taxes late online Educational assistance Exempt up to $5,250 of benefits each year. File 2012 taxes late online (See Educational Assistance , later in this section. File 2012 taxes late online ) Employee discounts Exempt3 up to certain limits. File 2012 taxes late online (See Employee Discounts , later in this section. File 2012 taxes late online ) Employee stock options See Employee Stock Options , later in this section. File 2012 taxes late online Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. File 2012 taxes late online Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. File 2012 taxes late online (Special rules apply to former employees. File 2012 taxes late online ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. File 2012 taxes late online (See Health Savings Accounts , later in this section. File 2012 taxes late online ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. File 2012 taxes late online Meals Exempt if furnished on your business premises for your convenience. File 2012 taxes late online Exempt if de minimis. File 2012 taxes late online Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. File 2012 taxes late online No-additional-cost services Exempt3 Exempt3 Exempt3 Retirement planning services Exempt5 Exempt5 Exempt5 Transportation (commuting) benefits Exempt1 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($130), qualified parking ($250), or qualified bicycle commuting reimbursement6 ($20). File 2012 taxes late online (See Transportation (Commuting) Benefits , later in this section. File 2012 taxes late online ) Exempt if de minimis. File 2012 taxes late online Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). File 2012 taxes late online Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. File 2012 taxes late online 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. File 2012 taxes late online 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. File 2012 taxes late online 4 Exemption does not apply to certain key employees under a plan that favors those employees. File 2012 taxes late online 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. File 2012 taxes late online 6 If the employee receives a qualified bicycle commuting reimbursement in a qualified bicycle commuting month, the employee cannot receive commuter highway vehicle, transit pass, or qualified parking benefits in that same month. File 2012 taxes late online 7 You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. File 2012 taxes late online Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. File 2012 taxes late online Also, show it in box 12 with code “C. File 2012 taxes late online ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. File 2012 taxes late online Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. File 2012 taxes late online Contributions to the cost of accident or health insurance including qualified long-term care insurance. File 2012 taxes late online Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. File 2012 taxes late online Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). File 2012 taxes late online This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following. File 2012 taxes late online Payments or reimbursements of medical expenses. File 2012 taxes late online Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). File 2012 taxes late online The payments must be figured without regard to any period of absence from work. File 2012 taxes late online Accident or health plan. File 2012 taxes late online   This is an arrangement that provides benefits for your employees, their spouses, their dependents, and their children (under age 27) in the event of personal injury or sickness. File 2012 taxes late online The plan may be insured or noninsured and does not need to be in writing. File 2012 taxes late online Employee. File 2012 taxes late online   For this exclusion, treat the following individuals as employees. File 2012 taxes late online A current common-law employee. File 2012 taxes late online A full-time life insurance agent who is a current statutory employee. File 2012 taxes late online A retired employee. File 2012 taxes late online A former employee you maintain coverage for based on the employment relationship. File 2012 taxes late online A widow or widower of an individual who died while an employee. File 2012 taxes late online A widow or widower of a retired employee. File 2012 taxes late online For the exclusion of contributions to an accident or health plan, a leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 2012 taxes late online Special rule for certain government plans. File 2012 taxes late online   For certain government accident and health plans, payments to a deceased plan participant's beneficiary may qualify for the exclusion from gross income if the other requirements for exclusion are met. File 2012 taxes late online See section 105(j) for details. File 2012 taxes late online Exception for S corporation shareholders. File 2012 taxes late online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File 2012 taxes late online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 2012 taxes late online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. File 2012 taxes late online Exclusion from wages. File 2012 taxes late online   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. File 2012 taxes late online Exception for certain long-term care benefits. File 2012 taxes late online   You cannot exclude contributions to the cost of long-term care insurance from an employee's wages subject to federal income tax withholding if the coverage is provided through a flexible spending or similar arrangement. File 2012 taxes late online This is a benefit program that reimburses specified expenses up to a maximum amount that is reasonably available to the employee and is less than five times the total cost of the insurance. File 2012 taxes late online However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. File 2012 taxes late online S corporation shareholders. File 2012 taxes late online   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the value of accident or health benefits you provide to the employee in the employee's wages subject to federal income tax withholding. File 2012 taxes late online However, you can exclude the value of these benefits (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. File 2012 taxes late online Exception for highly compensated employees. File 2012 taxes late online   If your plan is a self-insured medical reimbursement plan that favors highly compensated employees, you must include all or part of the amounts you pay to these employees in their wages subject to federal income tax withholding. File 2012 taxes late online However, you can exclude these amounts (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. File 2012 taxes late online   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. File 2012 taxes late online   A highly compensated employee for this exception is any of the following individuals. File 2012 taxes late online One of the five highest paid officers. File 2012 taxes late online An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. File 2012 taxes late online An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). File 2012 taxes late online   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. File 2012 taxes late online COBRA premiums. File 2012 taxes late online   The exclusion for accident and health benefits applies to amounts you pay to maintain medical coverage for a current or former employee under the Combined Omnibus Budget Reconciliation Act of 1986 (COBRA). File 2012 taxes late online The exclusion applies regardless of the length of employment, whether you directly pay the premiums or reimburse the former employee for premiums paid, and whether the employee's separation is permanent or temporary. File 2012 taxes late online Achievement Awards This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. File 2012 taxes late online The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. File 2012 taxes late online The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. File 2012 taxes late online Employee. File 2012 taxes late online   For this exclusion, treat the following individuals as employees. File 2012 taxes late online A current employee. File 2012 taxes late online A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. File 2012 taxes late online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 2012 taxes late online Exception for S corporation shareholders. File 2012 taxes late online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File 2012 taxes late online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 2012 taxes late online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. File 2012 taxes late online Exclusion from wages. File 2012 taxes late online   You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. File 2012 taxes late online The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). File 2012 taxes late online See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. File 2012 taxes late online    To determine for 2014 whether an achievement award is a “qualified plan award” under the deduction rules described in Publication 535, treat any employee who received more than $115,000 in pay for 2013 as a highly compensated employee. File 2012 taxes late online   If the cost of awards given to an employee is more than your allowable deduction, include in the employee's wages the larger of the following amounts. File 2012 taxes late online The part of the cost that is more than your allowable deduction (up to the value of the awards). File 2012 taxes late online The amount by which the value of the awards exceeds your allowable deduction. File 2012 taxes late online Exclude the remaining value of the awards from the employee's wages. File 2012 taxes late online Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. File 2012 taxes late online It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. File 2012 taxes late online To determine whether your plan meets this test, do not consider employees excluded from your plan who are covered by a collective bargaining agreement, if there is evidence that adoption assistance was a subject of good-faith bargaining. File 2012 taxes late online It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). File 2012 taxes late online A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. File 2012 taxes late online You give reasonable notice of the plan to eligible employees. File 2012 taxes late online Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. File 2012 taxes late online For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File 2012 taxes late online The employee was a 5% owner at any time during the year or the preceding year. File 2012 taxes late online The employee received more than $115,000 in pay for the preceding year. File 2012 taxes late online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. File 2012 taxes late online You must exclude all payments or reimbursements you make under an adoption assistance program for an employee's qualified adoption expenses from the employee's wages subject to federal income tax withholding. File 2012 taxes late online However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. File 2012 taxes late online For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. File 2012 taxes late online You must report all qualifying adoption expenses you paid or reimbursed under your adoption assistance program for each employee for the year in box 12 of the employee's Form W-2. File 2012 taxes late online Use code “T” to identify this amount. File 2012 taxes late online Exception for S corporation shareholders. File 2012 taxes late online   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. File 2012 taxes late online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 2012 taxes late online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, including using the benefit as a reduction in distributions to the 2% shareholder. File 2012 taxes late online Athletic Facilities You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. File 2012 taxes late online For this purpose, an employee's dependent child is a child or stepchild who is the employee's dependent or who, if both parents are deceased, has not attained the age of 25. File 2012 taxes late online On-premises facility. File 2012 taxes late online   The athletic facility must be located on premises you own or lease. File 2012 taxes late online It does not have to be located on your business premises. File 2012 taxes late online However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. File 2012 taxes late online Employee. File 2012 taxes late online   For this exclusion, treat the following individuals as employees. File 2012 taxes late online A current employee. File 2012 taxes late online A former employee who retired or left on disability. File 2012 taxes late online A widow or widower of an individual who died while an employee. File 2012 taxes late online A widow or widower of a former employee who retired or left on disability. File 2012 taxes late online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 2012 taxes late online A partner who performs services for a partnership. File 2012 taxes late online De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. File 2012 taxes late online A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. File 2012 taxes late online Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare. File 2012 taxes late online Examples of de minimis benefits include the following. File 2012 taxes late online Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. File 2012 taxes late online See Employer-Provided Cell Phones , later in this section, for details. File 2012 taxes late online Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes. File 2012 taxes late online Holiday gifts, other than cash, with a low fair market value. File 2012 taxes late online Group-term life insurance payable on the death of an employee's spouse or dependent if the face amount is not more than $2,000. File 2012 taxes late online Meals. File 2012 taxes late online See Meals , later in this section, for details. File 2012 taxes late online Occasional parties or picnics for employees and their guests. File 2012 taxes late online Occasional tickets for theater or sporting events. File 2012 taxes late online Transportation fare. File 2012 taxes late online See Transportation (Commuting) Benefits , later in this section, for details. File 2012 taxes late online Employee. File 2012 taxes late online   For this exclusion, treat any recipient of a de minimis benefit as an employee. File 2012 taxes late online Dependent Care Assistance This exclusion applies to household and dependent care services you directly or indirectly pay for or provide to an employee under a dependent care assistance program that covers only your employees. File 2012 taxes late online The services must be for a qualifying person's care and must be provided to allow the employee to work. File 2012 taxes late online These requirements are basically the same as the tests the employee would have to meet to claim the dependent care credit if the employee paid for the services. File 2012 taxes late online For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. File 2012 taxes late online Employee. File 2012 taxes late online   For this exclusion, treat the following individuals as employees. File 2012 taxes late online A current employee. File 2012 taxes late online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 2012 taxes late online Yourself (if you are a sole proprietor). File 2012 taxes late online A partner who performs services for a partnership. File 2012 taxes late online Exclusion from wages. File 2012 taxes late online   You can exclude the value of benefits you provide to an employee under a dependent care assistance program from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income. File 2012 taxes late online   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. File 2012 taxes late online This limit is reduced to $2,500 for married employees filing separate returns. File 2012 taxes late online   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. File 2012 taxes late online Special rules apply to determine the earned income of a spouse who is either a student or not able to care for himself or herself. File 2012 taxes late online For more information on the earned income limit, see Publication 503. File 2012 taxes late online Exception for highly compensated employees. File 2012 taxes late online   You cannot exclude dependent care assistance from the wages of a highly compensated employee unless the benefits provided under the program do not favor highly compensated employees and the program meets the requirements described in section 129(d) of the Internal Revenue Code. File 2012 taxes late online   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File 2012 taxes late online The employee was a 5% owner at any time during the year or the preceding year. File 2012 taxes late online The employee received more than $115,000 in pay for the preceding year. File 2012 taxes late online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. File 2012 taxes late online Form W-2. File 2012 taxes late online   Report the value of all dependent care assistance you provide to an employee under a dependent care assistance program in box 10 of the employee's Form W-2. File 2012 taxes late online Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. File 2012 taxes late online Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. File 2012 taxes late online Example. File 2012 taxes late online   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. File 2012 taxes late online In addition, it provides occasional on-site dependent care to its employees at no cost. File 2012 taxes late online Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. File 2012 taxes late online In addition, Emily used the on-site dependent care several times. File 2012 taxes late online The fair market value of the on-site care was $700. File 2012 taxes late online Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). File 2012 taxes late online Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount. File 2012 taxes late online Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. File 2012 taxes late online The exclusion also applies to graduate level courses. File 2012 taxes late online Educational assistance means amounts you pay or incur for your employees' education expenses. File 2012 taxes late online These expenses generally include the cost of books, equipment, fees, supplies, and tuition. File 2012 taxes late online However, these expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education: Has a reasonable relationship to your business, or Is required as part of a degree program. File 2012 taxes late online Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. File 2012 taxes late online Nor do they include the cost of lodging, meals, or transportation. File 2012 taxes late online Educational assistance program. File 2012 taxes late online   An educational assistance program is a separate written plan that provides educational assistance only to your employees. File 2012 taxes late online The program qualifies only if all of the following tests are met. File 2012 taxes late online The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. File 2012 taxes late online To determine whether your program meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. File 2012 taxes late online The program does not provide more than 5% of its benefits during the year for shareholders or owners. File 2012 taxes late online A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. File 2012 taxes late online The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. File 2012 taxes late online You give reasonable notice of the program to eligible employees. File 2012 taxes late online Your program can cover former employees if their employment is the reason for the coverage. File 2012 taxes late online   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File 2012 taxes late online The employee was a 5% owner at any time during the year or the preceding year. File 2012 taxes late online The employee received more than $115,000 in pay for the preceding year. File 2012 taxes late online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. File 2012 taxes late online Employee. File 2012 taxes late online   For this exclusion, treat the following individuals as employees. File 2012 taxes late online A current employee. File 2012 taxes late online A former employee who retired, left on disability, or was laid off. File 2012 taxes late online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 2012 taxes late online Yourself (if you are a sole proprietor). File 2012 taxes late online A partner who performs services for a partnership. File 2012 taxes late online Exclusion from wages. File 2012 taxes late online   You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. File 2012 taxes late online Assistance over $5,250. File 2012 taxes late online   If you do not have an educational assistance plan, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. File 2012 taxes late online Working condition benefits may be excluded from wages. File 2012 taxes late online Property or a service provided is a working condition benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. File 2012 taxes late online See Working Condition Benefits , later, in this section. File 2012 taxes late online Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. File 2012 taxes late online However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). File 2012 taxes late online Employee. File 2012 taxes late online   For this exclusion, treat the following individuals as employees. File 2012 taxes late online A current employee. File 2012 taxes late online A former employee who retired or left on disability. File 2012 taxes late online A widow or widower of an individual who died while an employee. File 2012 taxes late online A widow or widower of an employee who retired or left on disability. File 2012 taxes late online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 2012 taxes late online A partner who performs services for a partnership. File 2012 taxes late online Exclusion from wages. File 2012 taxes late online   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. File 2012 taxes late online For a discount on services, 20% of the price you charge nonemployee customers for the service. File 2012 taxes late online For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. File 2012 taxes late online   Determine your gross profit percentage in the line of business based on all property you offer to customers (including employee customers) and your experience during the tax year immediately before the tax year in which the discount is available. File 2012 taxes late online To figure your gross profit percentage, subtract the total cost of the property from the total sales price of the property and divide the result by the total sales price of the property. File 2012 taxes late online Exception for highly compensated employees. File 2012 taxes late online   You cannot exclude from the wages of a highly compensated employee any part of the value of a discount that is not available on the same terms to one of the following groups. File 2012 taxes late online All of your employees. File 2012 taxes late online A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. File 2012 taxes late online   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File 2012 taxes late online The employee was a 5% owner at any time during the year or the preceding year. File 2012 taxes late online The employee received more than $115,000 in pay for the preceding year. File 2012 taxes late online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. File 2012 taxes late online Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. File 2012 taxes late online Wages for social security, Medicare, and federal unemployment (FUTA) taxes do not include remuneration resulting from the exercise, after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or from any disposition of stock acquired by exercising such an option. File 2012 taxes late online The IRS will not apply these taxes to an exercise before October 23, 2004, of an incentive stock option or an employee stock purchase plan option or to a disposition of stock acquired by such exercise. File 2012 taxes late online Additionally, federal income tax withholding is not required on the income resulting from a disqualifying disposition of stock acquired by the exercise after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or on income equal to the discount portion of stock acquired by the exercise, after October 22, 2004, of an employee stock purchase plan option resulting from any disposition of the stock. File 2012 taxes late online The IRS will not apply federal income tax withholding upon the disposition of stock acquired by the exercise, before October 23, 2004, of an incentive stock option or an employee stock purchase plan option. File 2012 taxes late online However, the employer must report as income in box 1 of Form W-2, (a) the discount portion of stock acquired by the exercise of an employee stock purchase plan option upon disposition of the stock, and (b) the spread (between the exercise price and the fair market value of the stock at the time of exercise) upon a disqualifying disposition of stock acquired by the exercise of an incentive stock option or an employee stock purchase plan option. File 2012 taxes late online An employer must report the excess of the fair market value of stock received upon exercise of a nonstatutory stock option over the amount paid for the stock option on Form W-2 in boxes 1, 3 (up to the social security wage base), 5, and in box 12 using the code “V. File 2012 taxes late online ” See Regulations section 1. File 2012 taxes late online 83-7. File 2012 taxes late online An employee who transfers his or her interest in nonstatutory stock options to the employee's former spouse incident to a divorce is not required to include an amount in gross income upon the transfer. File 2012 taxes late online The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. File 2012 taxes late online See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. File 2012 taxes late online You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. File 2012 taxes late online irs. File 2012 taxes late online gov/pub/irs-irbs/irb02-19. File 2012 taxes late online pdf. File 2012 taxes late online See Revenue Ruling 2004-60, 2004-24 I. File 2012 taxes late online R. File 2012 taxes late online B. File 2012 taxes late online 1051, available at www. File 2012 taxes late online irs. File 2012 taxes late online gov/irb/2004-24_IRB/ar13. File 2012 taxes late online html. File 2012 taxes late online For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. File 2012 taxes late online Employer-Provided Cell Phones The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. File 2012 taxes late online Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit. File 2012 taxes late online For the rules relating to these types of benefits, see De Minimis (Minimal) Benefits , earlier in this section, and Working Condition Benefits , later in this section. File 2012 taxes late online Noncompensatory business purposes. File 2012 taxes late online   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. File 2012 taxes late online Examples of substantial business reasons include the employer's: Need to contact the employee at all times for work-related emergencies, Requirement that the employee be available to speak with clients at times when the employee is away from the office, and Need to speak with clients located in other time zones at times outside the employee's normal workday. File 2012 taxes late online Cell phones provided to promote goodwill, boost morale, or attract prospective employees. File 2012 taxes late online   You cannot exclude from an employee's wages the value of a cell phone provided to promote goodwill of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee. File 2012 taxes late online Additional information. File 2012 taxes late online   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. File 2012 taxes late online R. File 2012 taxes late online B. File 2012 taxes late online 407, available at  www. File 2012 taxes late online irs. File 2012 taxes late online gov/irb/2011-38_IRB/ar07. File 2012 taxes late online html. File 2012 taxes late online Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. File 2012 taxes late online It provides a general death benefit that is not included in income. File 2012 taxes late online You provide it to a group of employees. File 2012 taxes late online See The 10-employee rule , later. File 2012 taxes late online It provides an amount of insurance to each employee based on a formula that prevents individual selection. File 2012 taxes late online This formula must use factors such as the employee's age, years of service, pay, or position. File 2012 taxes late online You provide it under a policy you directly or indirectly carry. File 2012 taxes late online Even if you do not pay any of the policy's cost, you are considered to carry it if you arrange for payment of its cost by your employees and charge at least one employee less than, and at least one other employee more than, the cost of his or her insurance. File 2012 taxes late online Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. File 2012 taxes late online Group-term life insurance does not include the following insurance. File 2012 taxes late online Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. File 2012 taxes late online Life insurance on the life of your employee's spouse or dependent. File 2012 taxes late online However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. File 2012 taxes late online See De Minimis (Minimal) Benefits , earlier in this section. File 2012 taxes late online Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met. File 2012 taxes late online See Regulations section 1. File 2012 taxes late online 79-1 for details. File 2012 taxes late online Employee. File 2012 taxes late online   For this exclusion, treat the following individuals as employees. File 2012 taxes late online A current common-law employee. File 2012 taxes late online A full-time life insurance agent who is a current statutory employee. File 2012 taxes late online An individual who was formerly your employee under (1) or (2). File 2012 taxes late online A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction and control. File 2012 taxes late online Exception for S corporation shareholders. File 2012 taxes late online   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File 2012 taxes late online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 2012 taxes late online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. File 2012 taxes late online The 10-employee rule. File 2012 taxes late online   Generally, life insurance is not group-term life insurance unless you provide it to at least 10 full-time employees at some time during the year. File 2012 taxes late online   For this rule, count employees who choose not to receive the insurance unless, to receive it, they must contribute to the cost of benefits other than the group-term life insurance. File 2012 taxes late online For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. File 2012 taxes late online However, do not count an employee who must pay part or all of the cost of permanent benefits to get insurance, unless that employee chooses to receive it. File 2012 taxes late online A permanent benefit is an economic value extending beyond one policy year (for example, a paid-up or cash-surrender value) that is provided under a life insurance policy. File 2012 taxes late online Exceptions. File 2012 taxes late online   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. File 2012 taxes late online   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. File 2012 taxes late online If evidence that the employee is insurable is required, it is limited to a medical questionnaire (completed by the employee) that does not require a physical. File 2012 taxes late online You provide the insurance to all your full-time employees or, if the insurer requires the evidence mentioned in (1), to all full-time employees who provide evidence the insurer accepts. File 2012 taxes late online You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. File 2012 taxes late online See Regulations section 1. File 2012 taxes late online 79-1 for details. File 2012 taxes late online   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. File 2012 taxes late online You provide the insurance under a common plan covering your employees and the employees of at least one other employer who is not related to you. File 2012 taxes late online The insurance is restricted to, but mandatory for, all your employees who belong to, or are represented by, an organization (such as a union) that carries on substantial activities besides obtaining insurance. File 2012 taxes late online Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. File 2012 taxes late online   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. File 2012 taxes late online They were 65 or older. File 2012 taxes late online They customarily work 20 hours or less a week or 5 months or less in a calendar year. File 2012 taxes late online They have not been employed for the waiting period given in the policy. File 2012 taxes late online This waiting period cannot be more than 6 months. File 2012 taxes late online Exclusion from wages. File 2012 taxes late online   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. File 2012 taxes late online You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. File 2012 taxes late online In addition, you do not have to withhold federal income tax or pay FUTA tax on any group-term life insurance you provide to an employee. File 2012 taxes late online Coverage over the limit. File 2012 taxes late online   You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. File 2012 taxes late online Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. File 2012 taxes late online Also, show it in box 12 with code “C. File 2012 taxes late online ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. File 2012 taxes late online   Figure the monthly cost of the insurance to include in the employee's wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in Table 2-2. File 2012 taxes late online For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. File 2012 taxes late online You must prorate the cost from the table if less than a full month of coverage is involved. File 2012 taxes late online Table 2-2. File 2012 taxes late online Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . File 2012 taxes late online 05 25 through 29 . File 2012 taxes late online 06 30 through 34 . File 2012 taxes late online 08 35 through 39 . File 2012 taxes late online 09 40 through 44 . File 2012 taxes late online 10 45 through 49 . File 2012 taxes late online 15 50 through 54 . File 2012 taxes late online 23 55 through 59 . File 2012 taxes late online 43 60 through 64 . File 2012 taxes late online 66 65 through 69 1. File 2012 taxes late online 27 70 and older 2. File 2012 taxes late online 06 You figure the total cost to include in the employee's wages by multiplying the monthly cost by the number of full months' coverage at that cost. File 2012 taxes late online Example. File 2012 taxes late online Tom's employer provides him with group-term life insurance coverage of $200,000. File 2012 taxes late online Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. File 2012 taxes late online Tom's employer must include $170 in his wages. File 2012 taxes late online The $200,000 of insurance coverage is reduced by $50,000. File 2012 taxes late online The yearly cost of $150,000 of coverage is $270 ($. File 2012 taxes late online 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. File 2012 taxes late online The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. File 2012 taxes late online The employer also enters $170 in box 12 with code “C. File 2012 taxes late online ” Coverage for dependents. File 2012 taxes late online   Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount is not more than $2,000. File 2012 taxes late online If the face amount is greater than $2,000, the entire cost of the dependent coverage must be included in income unless the amount over $2,000 is purchased with employee contributions on an after-tax basis. File 2012 taxes late online The cost of the insurance is determined by using Table 2-2. File 2012 taxes late online Former employees. File 2012 taxes late online   When group-term life insurance over $50,000 is provided to an employee (including retirees) after his or her termination, the employee share of social security and Medicare taxes on that period of coverage is paid by the former employee with his or her tax return and is not collected by the employer. File 2012 taxes late online You are not required to collect those taxes. File 2012 taxes late online Use the table above to determine the amount of social security and Medicare taxes owed by the former employee for coverage provided after separation from service. File 2012 taxes late online Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. File 2012 taxes late online ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. File 2012 taxes late online Exception for key employees. File 2012 taxes late online   Generally, if your group-term life insurance plan favors key employees as to participation or benefits, you must include the entire cost of the insurance in your key employees' wages. File 2012 taxes late online This exception generally does not apply to church plans. File 2012 taxes late online When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. File 2012 taxes late online Include the cost in boxes 1, 3, and 5 of Form W-2. File 2012 taxes late online However, you do not have to withhold federal income tax or pay FUTA tax on the cost of any group-term life insurance you provide to an employee. File 2012 taxes late online   For this purpose, the cost of the insurance is the greater of the following amounts. File 2012 taxes late online The premiums you pay for the employee's insurance. File 2012 taxes late online See Regulations section 1. File 2012 taxes late online 79-4T(Q&A 6) for more information. File 2012 taxes late online The cost you figure using Table 2-2. File 2012 taxes late online   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. File 2012 taxes late online See section 416(i) of the Internal Revenue Code for more information. File 2012 taxes late online An officer having annual pay of more than $170,000. File 2012 taxes late online An individual who for 2014 was either of the following. File 2012 taxes late online A 5% owner of your business. File 2012 taxes late online A 1% owner of your business whose annual pay was more than $150,000. File 2012 taxes late online   A former employee who was a key employee upon retirement or separation from service is also a key employee. File 2012 taxes late online   Your plan does not favor key employees as to participation if at least one of the following is true. File 2012 taxes late online It benefits at least 70% of your employees. File 2012 taxes late online At least 85% of the participating employees are not key employees. File 2012 taxes late online It benefits employees who qualify under a set of rules you set up that do not favor key employees. File 2012 taxes late online   Your plan meets this participation test if it is part of a cafeteria plan (discussed in section 1) and it meets the participation test for those plans. File 2012 taxes late online   When applying this test, do not consider employees who: Have not completed 3 years of service, Are part-time or seasonal, Are nonresident aliens who receive no U. File 2012 taxes late online S. File 2012 taxes late online source earned income from you, or Are not included in the plan but are in a unit of employees covered by a collective bargaining agreement, if the benefits provided under the plan were the subject of good-faith bargaining between you and employee representatives. File 2012 taxes late online   Your plan does not favor key employees as to benefits if all benefits available to participating key employees are also available to all other participating employees. File 2012 taxes late online Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. File 2012 taxes late online S corporation shareholders. File 2012 taxes late online   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the cost of all group-term life insurance coverage you provide the 2% shareholder in his or her wages. File 2012 taxes late online When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. File 2012 taxes late online Include the cost in boxes 1, 3, and 5 of Form W-2. File 2012 taxes late online However, you do not have to withhold federal income tax or pay federal unemployment tax on the cost of any group-term life insurance coverage you provide to the 2% shareholder. File 2012 taxes late online Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. File 2012 taxes late online Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. File 2012 taxes late online Contributions to the account are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. File 2012 taxes late online The medical expenses must not be reimbursable by insurance or other sources and their payment from HSA funds (distribution) will not give rise to a medical expense deduction on the individual's federal income tax return. File 2012 taxes late online For more information about HSAs, visit the Department of Treasury's website at www. File 2012 taxes late online treasury. File 2012 taxes late online gov and enter “HSA” in the search box. File 2012 taxes late online Eligibility. File 2012 taxes late online   A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance except for permitted insurance listed under section 223(c)(3) or insurance for accidents, disability, dental care, vision care, or long-term care. File 2012 taxes late online For calendar year 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage and $12,700 for family coverage. File 2012 taxes late online   There are no income limits that restrict an individual's eligibility to contribute to an HSA nor is there a requirement that the account owner have earned income to make a contribution. File 2012 taxes late online Exceptions. File 2012 taxes late online   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. File 2012 taxes late online Also, an employee's participation in a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) generally disqualifies the individual (and employer) from making contributions to his or her HSA. File 2012 taxes late online However, an individual may qualify to participate in an HSA if he or she is participating in only a limited-purpose FSA or HRA or a post-deductible FSA. File 2012 taxes late online For more information, see Other employee health plans in Publication 969. File 2012 taxes late online Employer contributions. File 2012 taxes late online   Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. File 2012 taxes late online For 2014, you can contribute up to $3,300 for self-only coverage or $6,550 for family coverage to a qualified individual's HSA. File 2012 taxes late online   The contribution amounts listed above are increased by $1,000 for a qualified individual who is age 55 or older at any time during the year. File 2012 taxes late online For two qualified individuals who are married to each other and who each are age 55 or older at any time during the year, each spouse's contribution limit is increased by $1,000 provided each spouse has a separate HSA. File 2012 taxes late online No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. File 2012 taxes late online Nondiscrimination rules. File 2012 taxes late online    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. File 2012 taxes late online Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. File 2012 taxes late online   For guidance on employer comparable contributions to HSAs under section 4980G in instances where an employee has not established an HSA by December 31 and in instances where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses, see Regulations section 54. File 2012 taxes late online 4980G-4. File 2012 taxes late online Exception. File 2012 taxes late online   The Tax Relief and Health Care Act of 2006 allows employers to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee. File 2012 taxes late online A highly compensated employee for 2014 is an employee who meets either of the following tests. File 2012 taxes late online The employee was a 5% owner at any time during the year or the preceding year. File 2012 taxes late online The employee received more than $115,000 in pay for the preceding year. File 2012 taxes late online You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. File 2012 taxes late online Partnerships and S corporations. File 2012 taxes late online   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. File 2012 taxes late online Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances. File 2012 taxes late online Cafeteria plans. File 2012 taxes late online   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. File 2012 taxes late online However, cafeteria plan nondiscrimination rules still apply. File 2012 taxes late online For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. File 2012 taxes late online Contributions that favor lower-paid employees are not prohibited. File 2012 taxes late online Reporting requirements. File 2012 taxes late online   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. File 2012 taxes late online ” The trustee or custodian of the HSA, generally a bank or insurance company, reports distributions from the HSA using Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. File 2012 taxes late online Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. File 2012 taxes late online It is furnished on your business premises. File 2012 taxes late online It is furnished for your convenience. File 2012 taxes late online The employee must accept it as a condition of employment. File 2012 taxes late online Different tests may apply to lodging furnished by educational institutions. File 2012 taxes late online See section 119(d) of the Internal Revenue Code for details. File 2012 taxes late online The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. File 2012 taxes late online On your business premises. File 2012 taxes late online   For this exclusion, your business premises is generally your employee's place of work. File 2012 taxes late online For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. File 2012 taxes late online For your convenience. File 2012 taxes late online   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. File 2012 taxes late online You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. File 2012 taxes late online This is true even if a law or an employment contract provides that the lodging is furnished as pay. File 2012 taxes late online However, a written statement that the lodging is furnished for your convenience is not sufficient. File 2012 taxes late online Condition of employment. File 2012 taxes late online   Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. File 2012 taxes late online Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. File 2012 taxes late online   It does not matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. File 2012 taxes late online Example. File 2012 taxes late online A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. File 2012 taxes late online If Joan chooses to live at the hospital, the hospital cannot exclude the value of the lodging from her wages because she is not required to live at the hospital to properly perform the duties of her employment. File 2012 taxes late online S corporation shareholders. File 2012 taxes late online   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. File 2012 taxes late online A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 2012 taxes late online Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. File 2012 taxes late online Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. File 2012 taxes late online De Minimis Meals You can exclude any occasional meal or meal money you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. File 2012 taxes late online The exclusion applies, for example, to the following items. File 2012 taxes late online Coffee, doughnuts, or soft drinks. File 2012 taxes late online Occasional meals or meal money provided to enable an employee to work overtime. File 2012 taxes late online However, the exclusion does not apply to meal money figured on the basis of hours worked. File 2012 taxes late online Occasional parties or picnics for employees and their guests. File 2012 taxes late online This exclusion also applies to meals you provide at an employer-operated eating facility for employees if the annual revenue from the facility equals or exceeds the direct costs of the facility. File 2012 taxes late online For this purpose, your revenue from providing a meal is considered equal to the facility's direct operating costs to provide that meal if its value can be excluded from an employee's wages as explained under Meals on Your Business Premises , later. File 2012 taxes late online If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. File 2012 taxes late online The 50% limit on deductions for the cost of meals does not apply. File 2012 taxes late online The deduction limit on meals is discussed in chapter 2 of Publication 535. File 2012 taxes late online Employee. File 2012 taxes late online   For this exclusion, treat any recipient of a de minimis meal as