Business and Financial Policies and Procedures
 

Submit Taxable Fringe Benefit Payments

Before You Begin

Some fringe benefits are subject to employment taxes and must be reported on Form W-2. Units that provide the benefits must report the value to University Payroll and Benefits (UPB).

Begin

To submit taxable fringe benefit payments:

  1. Determine whether the fringe benefit is taxable. Fringe benefits are items such as, but not limited to:
  • Event tickets
  • Country club dues
  • Housing
  • Moving expenses that may be taxed (non-qualified moving expenses)
  • Tuition reduction
  • Personal use of an employer-provided vehicle
  1. Determine the number of taxable benefits you will process. If you are reporting:
  • 10 or less, use the Adjustment Notification Application (ANA). Open ANA, select “Taxable Benefit” as the adjustment type, and follow the on-screen instructions.
  • More than 10, use the Fringe Benefit Report Template. Complete all the required fields.
  1. Determine how much you want the employee to receive:
  • Net Award (unit increases award amount to cover taxes withheld) -- Use the online Gross-up Calculator to calculate what the total amount must be to ensure the employee will “take home” the desired amount.
  • Gross Award (unit does NOT increase the award to cover taxes withheld).
If you choose the net award, use either ANA or the Fringe Benefit Report Template to enter the C-FOAPAL to be charged the withholding amount.
  1. Submit fringe benefits by November 15 for benefits provided from November 1 of the previous year through October 31 of the current year. Benefits received after October 31 can be reported on next year’s income tax (IRS Special Accounting Rule).
UPB does NOT withhold on fringe benefits at the rate indicated on the Form W-4. It withholds at the Supplemental Rate as defined in IRS Publication 15B Employer’s Tax Guide to Fringe Benefits:
  • 25% withholding rate for Federal
  • 5% for State of Illinois
  • 1.45% Medicare, if applicable
  • 4.2% Social Security, if applicable

Taxable benefits are typically not subject to 8% SURS.


Forms Used in this Procedure

Fringe Benefit Report Template

Related Policies and Procedures

For information about when taxable benefits are subject to SURS, consult Section 18.5, Fringe Benefits

Additional Resources

To determine whether a fringe benefit is taxable, consult the Taxable Fringe Benefits (PDF)
IRS Publication 15B, Employer's Tax Guide to Fringe Benefits
Adjustment Notification Application (ANA)
Gross-Up Calculator

 

Last Updated: January 31, 2011 | Approved: Senior Associate Vice President for Business and Finance - March 2010