How often must noncash fringe benefits be reported for federal tax withholding purposes?

How often must noncash fringe benefits be reported for federal tax withholding purposes?

• A. each pay period
• B. monthly
• C. quarterly
• D. annually

Answer: (D)

Noncash fringe benefits are treated as part of an employee’s compensation and must be included in federal income tax withholding once, for the whole year. The IRS collects and reports these amounts on the annual Form W-2, which summarizes all wages and taxable fringe benefits for the calendar year. Withholding is calculated for each payroll period, but the official reporting to the IRS happens annually via the W-2, so the correct frequency is annually.

Noncash fringe benefits are treated as part of an employee’s compensation and must be included in federal income tax withholding once, for the whole year. The IRS collects and reports these amounts on the annual Form W-2, which summarizes all wages and taxable fringe benefits for the calendar year. Withholding is calculated for each payroll period, but the official reporting to the IRS happens annually via the W-2, so the correct frequency is annually.