Union paid fringe benefits

[Gretel]

I have a new client who uses unions and I never dealt with them. I did a lot of reading and understand that some items are paid by the employer, some by the employee. Some are taxable and some are not taxable and only the union can tell me what is what.

The question I have is if the employer contributes to the Pension fund and it is tax free, that this must mean it is qualified plan. Does this automatically mean that the box for employer provided pension plan needs to be checked? I think it does.

[Bert73]

I have a new client who uses unions and I never dealt with them. I did a lot of reading and understand that some items are paid by the employer, some by the employee. Some are taxable and some are not taxable and only the union can tell me what is what.

The question I have is if the employer contributes to the Pension fund and it is tax free, that this must mean it is qualified plan. Does this automatically mean that the box for employer provided pension plan needs to be checked? I think it does.

Yes, the employer pays into the pension but the union worker also contributes by work hours but you only need to worry about this if they take a distribution.
Also when deducting Union dues ( its usually a percentage of the gross income) and if it does not appear on the w2, Ask for the last paystub to figure out the % , there is usually field dues and regular local dues( the regular dues do not always appear on the w2).
Do not deduct if the paystub states savings or savings fund, this is something that some unions do to help when the worker is layed off, they recieve this money later in the year.

[Gretel]

more clear

Thanks, Bert73. I should have been more clear about my question. I have to double check payroll set up for the employer. Are you familiar with this and could I ask more questions if needed?

[Bert73]

Yes, Im very familiar with union worker returns. My husband is a Boilermaker but we have many friends that are not only in the Boilermaker Union but other unions as well.

Many of the union returns were given to me at my former job, I would have a little chuckle when a new client would be at my desk telling me they could deduct this or that. When I knew very well that this union paid for the certain expense or would reimburse the worker. Once I would explain what I knew, their reaction was always shock and to me it was priceless. I would retain a few but others would move on to another preparer that didnt know the ins and outs.

I posted this and had to edit after I reread your post. No, I do not do payroll set up for any Unions.( I know of some girls that do) Sorry.

[Gretel]

I would like to post a general question here related to Union benefits paid by the employer. It is my understanding that any benefit paid by the employer that is not excluded from income by code (f.e. retirement benefits and health benefits) are a taxable fringe benefits. F.e. if employer pays on behalf of employee for Apprenticeship training, this should be taxable, right?

So should any health benefit paid for S-Corp. owner follow the same rules as for non union workers. But is a Union plan then considered "established by the business"?

Any comments based on either knowledge or common sense are very much appreciated.

Bert, could you contact one of the girls who know?

[Bert73]

Gretel,

I will see if I can get a hold of one of the girls tomorrow. Until then I would hope someone else would jump in if they can help you!
Kim

[Bert73]

" F.e. if employer pays on behalf of employee for Apprenticeship training, this should be taxable, right?"

When you posted this, I wanted to give you my answer, but I thought I would get in touch with one of payroll girls first. She said it is not taxable to the Apprentice, that was my thoughts too. Most of the apprentices pay for the books and training ahead of their training and then are reimbursed after they graduate. As for non union workers, she said she doesnt do any payroll for nonunion workers. That is how my husbands union works, I think you should try to get a hold of another company within the union.
Good luck, I wish I could help you more.

[Gretel]

Thank you

so much for all your effort. Meanwhile I talked to different Unions and they were pretty consistent in 1. that payment into the Apprenticeship fund is for future education payment for this specific employee, 2. that this is non-taxable, and 3. that they do not give tax advise.

After my resources were exhausted I called the IRS and the 5th person they connected me to agreed with my conclusion that this is actually taxable. The code section that deals with employer paid education benefits (I am not in my office and forgot the number) says paid by the employer for ...books, materials, courses, etc., or reimburses the employee for such. It does not say: pays into a fund for later use. My best judgment is that this is a taxable fringe benefit.