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 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.

You can exclude the value of a minor cost ( "de minimis") benefit you provide to an employee from the employee's wages.
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.
Examples of de minimis benefits include the following. Occasional meal money and taxi fares for overtime work.
Transportation fare.
Occasional parties or picnics for employees and their guests.
Occasional tickets for theater or sporting events.
Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes.
Holiday gifts, other than cash, with a low fair market value.
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.

An employer can exclude the value of an employee's use of an On-Premises gym (or property leased by the employer, not necessarily located on the main business premises) 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.
Athletic facilities include gyms, golf courses, tennis courts, swimming pools.
The facilities must be available to all employees on a nondiscriminatory basis.

Employer reimbursements to you or payments to a third party for qualified adoption expenses are generally tax free up to $12,650 in 2012 ($13,360 in 2011.)
The exclusion is phased out if your modified gross income is between $189,710 and 229,710 in 2012 ($185,210 and $225,210 in 2011.)

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. .