Section 16.2 – Student Employee FICA Exception 16 – Taxes

Section 16.2 – Student Employee FICA Exception 16.3 – Fringe Benefits

Date: 11/2/06 — Approved: Finance Board

Note: Certain fringe benefits listed within this policy may not be provided to all or any AS employee(s). This policy does not include all fringe benefits available to all or any AS employee(s).

Note: This policy is intended for the purpose of informing AS employees and other AS-related individuals about relevant tax issues. This policy does not constitute legal or tax advice. Individuals should consult with their attorneys or tax professionals for advice on personal issues.

OVERVIEW

Fringe benefits are a form of pay, including cash and non-cash compensation, such as property or services, for the performance of services given by the provider of the benefits to the recipient of the benefits. For purposes of this policy, the provider, also commonly referred to as the employer, is the Associated Students of SDSU (AS), and recipients, individuals performing services in connection with a fringe benefit, are referred to as employees.

According to the Internal Revenue Service, gross income is defined as all income from whatever source derived, unless specifically excluded by law. Since fringe benefits are a form of compensation, the value is generally included in an employee's gross income and is subject to income and employment tax withholding. However, as outlined under a number of IRC provisions, a number of exceptions exist where certain fringe benefits are explicitly excluded from gross income.

In the event that an employee pays for a portion of a benefit received, the amount by which the fair market value of the benefit is greater than the amount paid by the employee is included in the employee's gross income. Also, in certain instances the value of fringe benefits may be included in an employee's gross income even though the employee did not actually receive the benefit. For example, an organization may provide a fringe benefit to an employee's family member who does not perform services for the organization.

Due to the numerous fringe benefits available for employers to provide employees and since the tax treatment of fringe benefits can vary depending on the facts and circumstances of each situation, this policy is intended to provide a brief background of the tax treatment for fringe benefits that may be offered to employees or are applicable to the AS.

FRINGE BENEFITS EXCLUDED FROM INCOME

The following list is comprised of several types of specific fringe benefits that may be either totally or partially excluded from an employee's gross income under provisions of the IRC:

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