Article Abstract:
The IRS has issued Revenue Procedure 96-28 which revises the optional approaches that can be used to substantiate the away-from-home travel costs of employees and independent contractors. This updates the list of 'high cost' localities listed in Revenue Procedure 94-77 for expenses paid or incurred after Mar. 31, 1996. Employees are required under Regulation 1.62-2 and Temp. Regulation 1.274-5T to report to the employer and substantiate expenses by records. However, these requirements can be automatically met under the aforementioned Revenue Procedure. Employees still have to substantiate the business link of the costs and return any allowance for days that cannot be deemed travel days. Employees and independent contractors can also use the Procedure to calculate the deductible cost of business meals and incidental expenses while on away-from-home travel.
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Article Abstract:
The IRS has just released Proposed Regulations concerning the payment of Federal Insurance Contributions Act (FICA) tax on nonqualified deferred compensation. The regulations explain how to compute the benefit annually for both defined contribution and defined benefit-type nonqualified plans. They also discuss ways to address such issues as valuation and refunds if defined benefit-type plans are offered. According to the regulations, the tax is due year-by-year as the deferred benefits are earned. In many cases, only the Medicare part of FICA will be considered because almost all individuals participating in nonqualified deferred compensation schemes earn wages exceeding the taxable wage base used to compute Social Security tax liability.
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Article Abstract:
The IRS has made available a simplified method by which the taxable portion of annuity distributions from qualified retirement plans may be calculated. Details of when and how this safe harbor method may be used are presented.
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