The following are from the IRS Federal, State, and Local Government (FSLG) newsletter
Taxable Fringe Benefit Essentials for Employers Webinar
The Tax Exempt and Government Entities Division would like to invite you to register to watch the free Taxable Fringe Benefit Essentials for Employers Webinar on April 14, 2021 at 1:00 p.m. (ET).
This webinar is designed to explain what a fringe benefit is and how to value a fringe benefit. It will cover the most common fringe benefits and explain if those fringe benefits are taxable.
For more information, see Webinars for Tax Exempt & Government Entities.
Redesigned Form W-4
The 2020 Form W-4 was redesigned to reduce the form's complexity and to increase transparency and accuracy in the withholding system. While it uses the same underlying information as the old design, it replaces complicated worksheets with more straightforward questions that make accurate withholding easier for employees.
Who must furnish a new Form W-4?
- All new employees first paid after 2019 must use the redesigned form.
- Existing employees who want to adjust their withholding.
- Existing employees that claim to be exempt from federal income tax withholding.
For additional information about Form W-4, see the links below:
What's New with Fringe Benefits
The business mileage rate for 2021 is 56 cents per mile down from 57.5 cents in 2020. You may use this rate to reimburse an employee for business use of a personal vehicle, and under certain conditions, you may use the rate under the cents-per-mile rule to value the personal use of a vehicle you provide to an employee.
For more information on Fringe Benefits, if they are taxable and how they should be reported, see the links below:
403(b) Contribution Limits
The limit on elective salary deferrals has not changed for 2021. The amount an employee can contribute to a 403(b) account out of salary is $19,500 for 2020 and 2021.
Age 50 catch-up: A plan may permit employees who are age 50 or over at the end of the calendar year to make additional salary deferrals of $6,500 in 2020 and 2021.
15-years of service catch-up: A 403(b) plan may permit employees who have at least 15 years of service with the same eligible 403(b) employer (a public school system, hospital, home health service agency, health and welfare service agency, church, or convention or association of churches (or associated organization)), to make additional salary deferrals equal to the lesser of:
- $3,000,
- $15,000, reduced by the amount of additional elective deferrals made in prior years because of this rule, or
- $5,000 times the number of the employee’s years of service for the organization, minus the total elective deferrals made for earlier years.
For employees eligible for both the age 50 and 15-years of service catch-ups, salary deferrals in excess of the deferral limit ($19,500 in 2020 and 2021) are first applied to the 15-year catch-up and then the age 50 catch-up.
For more information about 403(b) contributions limits, see the links below:
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