As 2017 draws to a close, there are some important items to keep in mind when putting together information for 2017 W-2’s.
Company provided vehicle:
If your company provides you, or any employee, with a company vehicle that is also used personally, you should include the personal use portion as a fringe benefit in the W-2. Simply contact your payroll service before the end of the year and tell them you want to add an amount for the personal use of a company vehicle. Below is a link to a table you can use to calculate the amount. Find the fair market value of the vehicle on the table (readily determinable on the web at Kelley Blue Book or Edmunds) and multiply the corresponding value times the personal use percentage. The personal use of auto compensation is subject to payroll taxes. If you use the services of a bookkeeper, or have an in-house accountant, this is something they can easily do for you.
Health Insurance for 2% or more Shareholders in S-Corporations:
Health insurance for employees is not taxable as compensation unless the benefit is paid on behalf of a more than 2%, S Corporation shareholder. Health and accident premiums paid on behalf of a 2% shareholder are reported as additional compensation to the shareholder. The value (normally cost) of the fringe benefit should be added to wages and included in the W-2. Due to the fact the health insurance is deductible by the S Corporation shareholder, there are no negative tax consequences to the shareholder or the S Corporation. These wages are not subject to FICA and FUTA taxes. The rules regarding the deductibility of health insurance have not changed, however the correct application of the rules is to present the health insurance premiums as taxable wages on the W-2.
If you are a participant in a 401(k) plan, there is still time to maximize your 2017 contribution. The amount of the elective deferral for 2017 is $18,000. When you reach age 50, you may make additional “catch-up” contributions of $6,000 for a total deferral of $24,000.