Taxable Fringe Benefits and Exclusions

 

The University of Tennessee provides several fringe benefits to employees, either university-wide or specific to certain departments and colleges.  These benefits are a form of pay in addition to stated salaries and can include meals, lodging, tickets, and tuition waivers to name a few.  Unless expressly excluded or deferred under the Internal Revenue Code (IRC), fringe benefits are taxable and must be included in the employee’s yearly gross income.  Over the next three years (beginning in 2010), the IRS is conducting some 6,000 payroll tax audits.  As these audits examine fringe benefits, it’s important to know what is excluded, and what isn’t.  Here are some common benefits and information on whether or not they can be excluded.

  • Cars – simply put, any use that is not related to university business is taxable.  Use for business purposes, conversely, is excludable, thus it is important to correctly maintain the car’s mileage log for vehicles assigned to individuals.

  • Meal Plans – where there is not a specific exclusion in the law, the provision of meal plans to an employee is deemed personal, and therefore taxable.  One particular exclusion may apply however: if an employee is required to be on call at the employer’s convenience, a provided meal is excludable – Hall Directors and Resident Assistants generally fall under this category.

  • Housing – as a fringe benefit, housing provided for the convenience of the employer, as a condition of employment, AND on business premises is excludable.

  • Clothing – this benefit is particularly relevant to athletic staff.  Any clothing provided to an employee that is NOT a uniform cannot be excluded and is taxable.

  • Graduate Student Waivers – tuition waivers for graduate students can be excluded as taxable income when the student is doing research or teaching.  Also, the provision of graduate level education up to $5,250/calendar year to any employee as a tuition benefit is excludable from gross income.

The university is currently developing a policy to address taxable fringe benefits.  Please stay tuned for more information on this initiative, and contact Ms. Melissa Johnson, our tax advisor, at 865-974-2493 or by email at johnsonm@tennessee.edu should you have any questions or need additional information.

 

 

 

 

 



 



 

Contact:

 

Charles M. Peccolo

Vice President & Treasurer

 

301 Andy Holt Tower
Knoxville, TN 37996
865-974-2302
865-974-2701 Fax