va. sheriffs’ association annual conference by wendy speelman
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VA. Sheriffs’ Association Annual Conference By Wendy Speelman Federal, State & Local Government Specialist 9/16/14. Uniform Requirements. For uniforms to be nontaxable and not be included in the employee’s wages they must: Be required by employer to be worn - PowerPoint PPT PresentationTRANSCRIPT
VA. Sheriffs’ Association Annual Conference
By Wendy SpeelmanFederal, State & Local Government Specialist 9/16/14
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Uniform Requirements
For uniforms to be nontaxable and not be included in the employee’s wages they must:
•Be required by employer to be worn• Must be in written policy
• Can’t be optional if they wear them
•Not be adaptable to every day street wear
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How Clothing is Purchased
• Uniform rules applies to: • If the employer purchases the clothing
• If the employee purchases and the employer reimburses the employee
• If purchased thru a rental company
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Accountable Plan
• Allowances paid through non- accountable plan are Taxable• If give employee $200 for uniform and they
don’t provide substation (receipts) then must include in W-2
• Business Connection
• Return excess in reasonable time
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Law & Court Cases
• If clothing suitable for taking the place of regular clothing, include in W-2• IRC 162 & 262• Mella v. Commissioner T.C. Memo 1968-594
• Not enough that the employee does not wear the clothing away from work• Pevsner v. Commissioner 628 F.2d 467
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Examples of Non Uniforms
•Ball Caps
•T-shirts
•Socks
•All shoes unless steel toe (safety)
•Tactical/BDU pants
•Polo Shirts
•Plain belts
•Shorts
•Under Armour
•Gloves - patrolman
•Sweatshirt
•Carhart jacket
•Jeans
Employer-Provided Vehicles
• Personal Use is taxable & included in wages• Includes commuting
• Business Use is not taxable
• No record kept then all taxable
• Exception: qualified non-personal use vehicle (QNPV)
Qualified Non-personal Use Vehicle
• Must have policy on restricting personal use of the vehicle
• Commuting is nontaxable to the employee
• Substantiation and record keeping is not required
Examples of QNPV
• Clearly marked police and fire vehicles if:• The employee is always on call
• Require to be used for commute
• The employer must prohibit personal use for travel outside of the officer jurisdiction
• Readily apparent the vehicle is a public safety vehicle (words or painted insignia)
Examples of QNPV continued
• Unmarked law enforcement vehicles if:• Any personal use must be authorized by the
employer and must be incident to law-enforcement functions
• The employer must be a govt. unit responsible for prevention or investigation of crime
• Law enforcement officer must be full time, execute warrants, make arrests & carry firearm
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Not a qualified vehicle
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Day Meals
• If the employer reimburses or pays for meals on a day trip then:• Include the cost of meal reimbursed to the
employee in their payroll as a fringe benefit
• Subject to Federal Income Tax, Medicare and SS if regular wages are subject to SS and Medicare
• Revenue Ruling 75-432 & 75-170
Day Meals continued
• If union contract says to pay for meals then reimburse but include in wages
• If have policy to pay for meals if traveling out of county it is still taxable and included in wages • Must include in payroll the amount of lunch
as a noncash item
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Meals at Conferences
• “Associated With” Meals - Tax-Free not included in wages• Meals at conventions
• Meals at conferences
• Does not include going to lunch with co-worker (this would be personal & taxable = include in wages)
• Behavioral Control - how, when and where to do the work; training
• Financial Control - significant investment, expenses, opportunity for profit or loss
• Relationship of the Parties - employee benefits, written contracts
Independent Contractor or Employee
Resources
• Publication 1779 - determination on status of worker as either an independent contractor or an employee
• Publication 963 Chapter 3
• Revenue Ruling 87-41 – 20 factors
• Internal Revenue Code 3401
Supplemental Pay
• Compensation paid in addition to regular wages
• Examples: overtime pay, bonus
• Withhold federal income tax at 25%
• Or use formula
• Subject to Medicare and SS if applicable
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Department of the Treasury Internal Revenue Service
www.irs.gov