Payroll: Fringe Benefits

Will you need to update employees’ taxable wages, for W-2 purposes, to report personal use of a company car, or other fringe benefits? If so, now is the time to set this up in your payroll system to process with the employees’ last pay of the year.
Fringe benefits provided to employees in a form other than cash are known as “non-cash fringe benefits.” They must be processed through payroll and be reflected on Form W-2 because they increase employees’ taxable earnings, and thereby, their taxes.?_
To set up a non-cash fringe benefit in the system, you will need to create a Deduction Description, and then add that deduction to the applicable employees. Ideally, you should set up a recurring amount to be added to each paycheck throughout the year, to spread out the increase to the employees’ and the employer taxes. Alternatively, you can enter lump sums to be added to employees’ wages on a monthly/quarterly/annual basis. Many employers choose to enter lump sum amounts on the employees’ last check of the calendar year. In either case, you are treating these earnings as imputed income, meaning you are including the fringe amount with the employees’ regular wages, and calculating taxes on the total. The IRS does not care how often you report these taxable earnings, as long as you report them in the proper tax year.
Please refer to this link?_OpenRDA Answers?_for specific instructions on the setup of fringe benefit deductions. If you have questions, or are in need of assistance, please submit a Cyber Support request.

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