The Washington Report
February 10, 2021
Note to subscribers: Due to the current environment, information is changing at a rapid rate. While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change or be revised after our publication deadline. Stay healthy and safe! ~The Washington Report team
IRS Releases Employer's Tax Guide to Fringe Benefits for 2021
On February 5, 2021, the Internal Revenue Service (IRS) released Publication 15b - Employer’s Tax Guide to Fringe Benefits for Use in 2021. This publication supplements Publication 15, Employer's Tax Guide, and Publication 15-A, Employer's Supplemental Tax Guide. The guide contains information for employers on the employment tax treatment of fringe benefits. New items include:
- Cents-per-mile rule. The business mileage rate for 2021 is 56 cents per mile.
- Qualified parking exclusion and commuter transportation benefit. For 2021, the monthly exclusion for qualified parking is $270 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $270. These amounts are unchanged from 2020.
- Contribution limit on a health flexible spending arrangement (FSA). For plan years beginning in 2021, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,750. This amount is unchanged from 2020.
- New Form 1099-NEC. There is a new Form 1099-NEC to report nonemployee compensation paid in 2020.
Please refer to the guide for an overview, exclusion and valuation rules, as well as other provisions.
IRS Publication 15b - Employer’s Tax Guide to Fringe Benefits for Use in 2021, is available here.
FAQs—Employer-Provided Incentives for COVID-19 Vaccinations
An employer mandate that employees receive a COVID-19 vaccine as a condition of returning to the worksite represents a potentially difficult undertaking. As a result, employers are exploring the idea of incentivizing employees to get vaccinated for COVID-19.
The Aon bulletin, which contains high-level answers to some of the most frequently asked questions (FAQs) about vaccine incentive programs, is available here.
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