The IRS issued an early release draft of their annual Publication 15-B. The draft contains tax forms, instructions, and other resources for taxpayers. The IRS requests that those subject to file forms under any topic presented in 15-B not file draft forms. The IRS provides an overviews of significant changes on the publication coversheet, but future released legislation or regulation may impact the information contained within Publication 15-B. All IRS forms and instructions are subject to Office of Management and Budget (“OMB”) approval before they can be officially released. Draft Publication 15-B covers the rules for Fringe Benefits and, for the purposes of this Bulletin, we will focus on commuter benefits.
Employer Action Items
- Employers and plan sponsors should read through the draft Publication 15-B and update their plan documents with the new benefit limits.
- Employers and plan sponsors should read through the commuter benefits IRS language and exclusion limits for 2025 and prepare their own systems to account for a changed maximum.
Summary
From the IRS Publication are the following definitions:
Fringe Benefits: A fringe benefit is a form of pay for the performance of services. For example, you provide an employee with a fringe benefit when you allow the employee to use a business.
Performance of Services: A person who performs services for you doesn’t have to be your employee. A person may perform services for you as an independent contractor, partner, or director. Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services.
Provider of Benefit: You’re the provider of a fringe benefit if it is provided for services performed for you. You’re considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you.
Recipient of Benefit: The person who performs services for you is considered the recipient of a fringe benefit provided for those services. That person may be considered the recipient even if the benefit is provided to someone who didn’t perform services for you.
Commuter Fringe Benefits
- De Minimis Transportation Benefits – a de minimis transportation benefit is any local transportation benefit you provide to an employee if it has so little value (taking into account how frequently you provide transportation to your employees) that accounting for it would be unreasonable or administratively burdensome.
- Qualified Transportation Benefits – employer-provided reimbursements for a ride in a commuter highway vehicle, mass transit passes, and qualified parking costs are excluded from the employee’s gross income.
- Exclusion from Employee’s Income – up to $325 per month limit in 2025 for commuter highway vehicle transportation and mass transit passes. For qualified parking costs, the limit for 2025 is $325 per month.
Additional Resources:
- Please see the Baldwin Group 2023-2025 benefit plan maximums and limits (Here)
- https://www.irs.gov/pub/irs-dft/p15b–dft.pdf
For more information
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