Taxable Fringe Benefit Descriptions
Some fringe benefits provided by the University—such as cars, free tickets, and graduate-level tuition assistance—are subject to federal income, state income, Social Security, and Medicare tax rules. According to the IRS, all compensation paid to, or on behalf of, an employee is taxable, unless specifically excluded by IRS code. (On your pay statement, Taxable Fringe Benefits are not included in the Hours and Earnings section under Earnings or YTD Earnings. However, they are included in the Fed Taxable Gross, shown in the Totals section near the bottom of your pay statement.)
Here is a list of non-cash compensation or benefits the University has identified as taxable income, and which will be reported on your Form W-2.
Apparel Allowance Benefit: Value of a merchandise credit that allows certain employees to buy clothes and goods from an outside vendor
Car Leasing Benefit: Value of personal use of a University-provided vehicle
Club Membership Benefit: Value of University-paid club memberships and related expenditures that are not for a bona-fide University business purpose
Gift Certificate Benefit: Value of any gift certificates awarded to an employee. Also, see the University policy on Employee Recognition Awards. Follow the instructions on the Gift Card/Certificate Reporting Form (Excel) to submit taxable amounts to Payroll Services
Gross-up Definition: When a University department pays an employee's taxes, the amount paid is an employer-provided benefit. The taxes paid on the employee's behalf are taxable income to the employee. Each payment of taxes results in more wages and more taxes. The IRS has approved a procedure commonly known as "grossing-up" to calculate the gross payment the employee must receive when the employer pays the employee's taxes. The formula is based on the supplemental rates: Grossed-up amount of earnings = Desired payment amount divided by 100% minus total tax %. An example of grossing up a gift or prize with a value of $100: 163.67 = $100 / (100% - (25% + 6.25% + 6.2% + 1.45%)).
Moving Expenses Taxable Benefit: The value of employer-paid moving expenses that are subject to all withholding, whether paid to an employee or a third party. Examples: cost of meals while traveling, expenses of a house-hunting trip, and temporary living expenses. IRS publication 521 explains the rules surrounding taxable moving expenses.
Rent Benefit: Market value of University-provided housing or payment of housing costs where housing is determined to be a personal benefit
Ticket/Passes Benefit: Value of season tickets or passes to events for which there is no University business purpose
Spousal Travel Benefit: Value of University-paid travel for spouse of University official when spouse's attendance serves no official University business purpose
Regents/Academic Tuition Benefit: Value of University-paid tuition for credits taken by employee in a graduate degree program, if total tuition benefit exceeds $5,250 in a calendar year
Taxable Benefit/Compensation: Value of miscellaneous taxable benefits or compensation paid by departments on behalf of employees