2. Salaries, Wages, and Fringe Benefits

Question 1

Gross income includes what kind of income

Answer 1

Money, property, and bargain purchases (when buying below FMV)

Question 2

What are guaranteed payments to a partner

Answer 2

Reasonable compensation paid to a partner for services rendered (or use of capital) without regard to the partner’s income or loss sharing %

Question 3

Fair value of Fringe Benefits (non statutory) is income?

Answer 3

Except for the items excluded by law, it is taxable income. For example: employee personal use of company car is included in wages. And is subject to employment taxes and income and FICA tax withholdings.

Question 4

Is it income: Employer Contributions to Roth 401(k) accounts.

Answer 4

Roth contributions made by employer to employee’s 401K account are included in the employee’s income.

Question 5

group life insurance policy covering employees are not income to employees up to the cost on the first $50K coverage. TRUE or FALSE

Answer 5

True

Question 6

What are the nontaxable Fringe benefits

Answer 6

Accident, Medical, and Health Insurance (Employer paid portion)

Question 7

What are De Minimis Fringe Benefits

Answer 7

So minimal that they are impractical to account for and may be excluded from income. Ex. employee’s personal use of company computer

Question 8

Meals and lodging do are not included in taxable income. Why

Answer 8

Only if it was required as condition of employment.

Question 9

How much can be excluded from gross income for payments made by the employer on behalf of an employee’s educational expenses?

Answer 9

$5,250

Question 10

Employee adoption assistance programs: what is limit excluded from taxable income?

Answer 10

$15,950 for 2023 (maxes out for AGI 239K-279K)

Question 11

Dependent care assistance (nontaxable fringe benefits)

Answer 11

$5K used for kids under 13 or dependent physically or mentally incapable

Question 12

Merchandise discounts from employer to employee but be capped at what?

Answer 12

limited to the employer’s gross income profit %, any excess over that is included in employee’s income

Question 13

Service discounts from ER to EE is limited to what % of the FMV of services?

Answer 13

20%

Question 14

ER provided parking and transit passes up to $???/mo may be excluded.

Answer 14

$300/month

Question 15

Non-Roth qualified retirement plans are

Answer 15

excluded from taxable income or pretax

Question 16

FSAs (flexible spending accounts) are pretax. What is it used for and What is the amount for 2023

Answer 16

For childcare or medical expenses, $3050

Question 17

What are the carryover rules for FSAs

Answer 17

Can carryover up to $610 but needs to be spent 2.5 months after EOY.