Taxable Fringe Benefits
Under the Internal Revenue Code (26 U.S. Code § 61(a)(1)) [PDF], fringe benefits received as compensation for
services, or in connection with services provided, are included as part of an individual's
gross income unless an exclusion applies. These benefits ("taxable fringe benefits")
are reportable by an employer on the employee's Form W-2 for the year in which
the benefits were received.
The Internal Revenue Service defines a fringe benefit as a form of pay (including property, services, cash, or cash equivalent) in addition to pay for the performance of service. Examples of common taxable fringe benefits include (but are not limited to):
- Athletic tickets (single game tickets or season tickets),
- Relocation expenses (whether paid directly to a relocation vendor or paid to the employee as a reimbursement),
- Gifts and awards above
de minimis value,
- Employer provided housing, and
- Employer provided transportation (when provided for personal use).
The value of a taxable fringe benefit is determined based on the benefit's "fair
market value." This will generally be the cost of the benefit (such as the face
value of an athletic ticket). When WVU Tax Services receives notification that
an employee has received a taxable fringe benefit, this value will be added to
the employee's wages and the appropriate federal, state, and FICA taxes will
be withheld from the employee's pay.
WVU Tax Services will send a taxable fringe benefit notice to employees prior to withholding taxes from their pay. This notice will outline the value of the taxable fringe benefit received, a description of the benefit received, and the pay date taxes will be withheld on. Employees will also have the option to spread the value of the fringe benefit across multiple pays to offset some of the tax burden.
If an individual who received a taxable fringe benefit is no longer employed by WVU at the time of the notification (but was employed at the time the benefit was received), the value of the taxable fringe benefit will be added to the individual's earnings on their Form W-2 and any applicable taxes will be assessed when the employee files their personal income tax return.
Note: Employer provided educational assistance (including tuition waivers) are potentially a taxable fringe benefit, regardless of the educational level. Specific information on tuition waivers can be found on the Employer Provided Educational Assistance (Tuition Waivers) page.
For questions on the taxability of a fringe benefit (including if a gift or award is considered above de minimis value), please contact Tax Services.