Question

2- Which of the following noncash fringe benefits are considered taxable and subject to withholding?

a.qualified transportation fringe.

b.membership in a country club.

c.reduced tuition for education.

d.de minimis fringe benefits.

3- Which of the following items are not included in Social Security wages that are reported in Box 3 of Form W-2.

a.group term life insurance premiums in excess of $50,000 of coverage.

b.gross wages paid in excess of the taxable wage base for OASDI for the year.

c.employer contributions to a deferred comp plan if it is included in Box 12 (codes D, E, F or G), even if not included in Box 1.

d.employee business expenses that are included in the "Wages, tips and other compensation" box.

Answer 1

2. Answer: (b)

Explanation: qualified transportation benefits and reduced tuition for education are non taxable noncash fringe benefits upto certain limit. In case of de minimis fringe benefits Internal Revenue Code section 132(a)(4) states that these small amounts are not subject to taxation.

3. Answer: (d)

Explanation: employee business expenses that are included in the "Wages, tips and other compensation" box are not included in Social Security Wages reported in Box 3 of Form W-2 because these are reported in Box 1 of Form W-2.