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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Fringe Benefits Fileid: … tions/p525/2022/a/xml/cycle08/source rendered are treated as guaranteed payments
rately report this value to you in box 14 (or on a
separate statement). and are includible in the shareholder-employ-
Fringe benefits received in connection with the ee's gross income. The shareholder-employee
performance of your services are included in Accident or Health Plan can deduct the contribution made to the share-
your income as compensation unless you pay holder-employee's HSA.
FMV for them or they’re specifically excluded by In most cases, the value of accident or health Qualified HSA funding distribution. You
law. Refraining from the performance of serv- plan coverage provided to you by your em- can make a one-time distribution from your indi-
ices (for example, under a covenant not to com- ployer isn’t included in your income. Benefits vidual retirement arrangement (IRA) to an HSA
pete) is treated as the performance of services you receive from the plan may be taxable, as and you generally won’t include any of the dis-
for purposes of these rules. explained under Sickness and Injury Benefits, tribution in your income. See Pub. 590-B for the
later.
See Valuation of Fringe Benefits, later in this requirements for these qualified HSA funding
discussion, for information on how to determine For information on the items covered in this distributions.
the amount to include in income. section, other than Long-term care coverage, Adoption Assistance
Recipient of fringe benefit. You're the recipi- see Pub. 969.
ent of a fringe benefit if you perform the serv- Long-term care coverage. Contributions by You may be able to exclude from your income
ices for which the fringe benefit is provided. your employer to provide coverage for amounts paid or expenses incurred by your em-
You're considered to be the recipient even if it’s long-term care services generally aren’t inclu- ployer for qualified adoption expenses in con-
given to another person, such as a member of ded in your income. However, contributions nection with your adoption of an eligible child.
your family. An example is a car your employer made through a flexible spending or similar ar- See the Instructions for Form 8839 for more in-
gives to your spouse for services you perform. rangement (such as a cafeteria plan) must be formation.
The car is considered to have been provided to included in your income. This amount will be re-
you and not to your spouse. ported as wages in box 1 of Form W-2. Adoption benefits are reported by your em-
You don’t have to be an employee of the ployer in box 12 of Form W-2 with code T. They
provider to be a recipient of a fringe benefit. If Archer MSA contributions. Contributions by are also included as social security and Medi-
you're a partner, a director, or an independent your employer to your Archer MSA generally care wages in boxes 3 and 5. However, they
contractor, you can also be the recipient of a aren’t included in your income. Their total will aren’t included as wages in box 1. To determine
fringe benefit. be reported in box 12 of Form W-2 with code R. the taxable and nontaxable amounts, you must
You must report this amount on Form 8853, complete Part III of Form 8839. File the form
Provider of benefit. Your employer or an- Archer MSAs and Long-Term Care Insurance with your return.
other person for whom you perform services is Contracts. File the form with your return.
the provider of a fringe benefit regardless of Athletic Facilities
whether that person actually provides the fringe Health flexible spending arrangement
benefit to you. The provider can be a client or (health FSA). If your employer provides a If your employer provides you with the free or
customer of an independent contractor. health FSA that qualifies as an accident or low-cost use of an employer-operated gym or
health plan, the amount of your salary reduc- other athletic club on your employer's premises,
Accounting period. You must use the same tion, and reimbursements of your medical care the value isn’t included in your compensation.
accounting period your employer uses to report expenses, in most cases aren’t included in your The gym must be used primarily by employees,
your taxable noncash fringe benefits. Your em- income. their spouses, and their dependent children.
ployer has the option to report taxable noncash For 2022, health FSAs are subject to a
fringe benefits by using either of the following $2,850 limit on a salary reduction contribution. If your employer pays for a fitness program
rules. provided to you at an off-site resort hotel or ath-
• The general rule: benefits are reported for Health reimbursement arrangement (HRA). letic club, the value of the program is included
a full calendar year (January 1–December If your employer provides an HRA that qualifies in your compensation.
31). as an accident or health plan, coverage and re-
• The special accounting period rule: bene- imbursements of your medical care expenses De Minimis (Minimal) Benefits
fits provided during the last 2 months of the generally aren’t included in your income.
calendar year (or any shorter period) are If your employer provides you with a product or
treated as paid during the following calen- Health savings account (HSA). If you’re an service and the cost of it is so small that it would
dar year. For example, each year your em- eligible individual, you and any other person, in- be unreasonable for the employer to account
ployer reports the value of benefits provi- cluding your employer or a family member, can for it, the value isn’t included in your income. In
ded during the last 2 months of the prior make contributions to your HSA. Contributions, most cases, the value of benefits such as dis-
year and the first 10 months of the current other than employer contributions, are deducti- counts at company cafeterias, cab fares home
year. ble on your return whether or not you itemize when working overtime, occasional personal
Your employer doesn’t have to use the same deductions. Contributions made by your em- use of an employer’s copying machine (where
accounting period for each fringe benefit, but ployer aren’t included in your income. Distribu- at least 85% of the use of the machine is for
must use the same period for all employees tions from your HSA that are used to pay quali- business), and company picnics aren’t included
who receive a particular benefit. fied medical expenses aren’t included in your in your income. Also, see Employee Discounts,
You must use the same accounting period income. Distributions not used for qualified later.
that you use to report the benefit to claim an medical expenses are included in your income.
employee business deduction (for example, See Pub. 969 for the requirements of an HSA. Holiday gifts. If your employer gives you a tur-
use of a car). Contributions by a partnership to a bona fide key, ham, or other item of nominal value at
partner's HSA aren’t contributions by an em- Christmas or other holidays, don’t include the
Form W-2. Your employer must include all tax- ployer. The contributions are treated as a distri- value of the gift in your income. However, if your
able fringe benefits in box 1 of Form W-2 as wa- bution of money and aren’t included in the part- employer gives you cash, a gift certificate, or a
ges, tips, and other compensation, and, if appli- ner's gross income. Contributions by a similar item that you can easily exchange for
cable, in boxes 3 and 5 as social security and partnership to a partner's HSA for services ren- cash, you include the value of that gift as extra
Medicare wages. Although not required, your dered are treated as guaranteed payments that salary or wages regardless of the amount in-
employer may include the total value of fringe are includible in the partner's gross income. In volved.
benefits in box 14 (or on a separate statement). both situations, the partner can deduct the con-
However, if your employer provided you with a tribution made to the partner's HSA.
vehicle and included 100% of its annual lease Contributions by an S corporation to a
value in your income, the employer must sepa- 2%-shareholder-employee's HSA for services
Publication 525 (2022) Page 5