Small Business

You must use the general valuation rule to determine the value of most fringe benefits. Under this rule, the value of a fringe benefit is its fair market value.
The fair market value (FMV) of a fringe benefit is the amount an employee would have to pay a third party in an arm's-length transaction to buy or lease the benefit.
Neither the amount the employee considers to be the value of the fringe benefit nor the cost you incur to provide the benefit determines its FMV.

The value of lodging is not taxable if as a condition of employement the employee must accept the lodging on the employer's business premises for the employer's convenience.
The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging.

The value of employer provided meals is not taxable if furnished on your employer's business premises for the employer's convenience.
The employer can exclude any occasional meal or meal money he or she provides 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.
The exclusion applies, for Coffee, doughnuts, or soft drinks, occasional meals or meal money provided to enable an employee to work overtime, occasional parties or picnics for employees and their guests.
Food or beverages the employer furnishes to employees qualify as a de minimis benefit, and can be deducted at their full cost. The 50% limit on deductions for the cost of meals does not apply.

The actual value of fringe benefits provided during a calendar year must be determined by January 31 of the following year. You must report the actual value on Forms 941 (or Form 944) and W-2. If you choose, you can use a separate Form W-2 for fringe benefits and any other benefit information.
Include the value of the fringe benefit in box 1 of Form W-2. Also include it in boxes 3 and 5, if applicable.
You may show the total value of the fringe benefits provided in the calendar year or other period in box 14 of Form W-2. However, if you provided your employee with the use of a highway motor vehicle and included 100% of its annual lease value in the employee's income, you must also report it separately in box 14 or provide it in a separate statement to the employee so that the employee can compute the value of any business use of the vehicle.

Generally, you must determine the value of noncash fringe benefits no later than January 31 of the next year. Before January 31, you may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time.
For employment tax and withholding purposes, you can treat fringe benefits (including personal use of employer-provided highway motor vehicles) as paid on a pay period, quarter, semiannual, annual, or other basis. You do not have to choose the same period for all employees. You can withhold more frequently for some employees than for others.
You can add the value of fringe benefits to regular wages for a payroll period and figure income tax withholding on the total. Or you can withhold federal income tax on the value of fringe benefits at the flat 25% rate that applies to supplemental wages.

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.
Graduate school expenses qualify as well as undergraduate courses.
Payments are tax free provided that the courses do not satisfy the employer's minimum educational standards and do not qualify the student for a new profession.
Educational assistance means amounts you pay or incur for your employees' education expenses.
These expenses generally include the cost of books, equipment, fees, supplies, and tuition. 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.
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.
They do not include the cost of lodging, meals, or transportation.

Employer 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.
For 2013, the employer can contribute up to $3,250 for self-only coverage or $6,450 for family coverage to a qualified individual's HSA.

An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. This limit is reduced to $2,500 for married employees filing separate returns.
The employer can exclude the value of benefits from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income and qualify for the dependent care credit.
The employer 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.

Premiums paid by employer to recipient are not taxed if policy coverage is $50,000 or less. .