On December 26, 2019, the IRS released the 2020 IRS Publication 15-B, the Employer’s Tax Guide to Fringe Benefits. This publication provides an overview of the taxation and exclusion rules applicable to employee benefits such as accident and health benefits, dependent care assistance, health savings accounts, and group term life insurance coverage. The guide also includes the related valuation, withholding, and reporting rules.
As background, the IRS updates Publication 15-B each year to incorporate any recent administrative, reporting, or regulatory changes. The revisions also include applicable dollar maximums for certain tax-favored benefits for the current year.
The 2020 updates include the introduction of a new Form 1099-NEC for reporting non-employee compensation paid in 2020. Employers reporting non-employee compensation paid in 2019 should continue to use Form 1099-MISC, which is due January 31, 2020.
The business mileage rate for 2020 is 57.5 cents per mile, which can be used to reimburse an employee for business use of a personal vehicle, and under certain conditions, to value the personal use of a vehicle provided to an employee. The 2020 monthly exclusion for qualified parking is $270 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $270. For plan years beginning in 2020, the maximum salary reduction permitted for a health FSA under a cafeteria plan is $2,750.
Employers should be aware of the availability of the updated publication and most recent modifications.
Publication 15-B »