Employer-Provided Cell Phones

Wondering whether company-paid cell phone service should be considered a fringe benefit, and as such added to the employee’s wages as income?

The IRS provides the following guidance:

  • If the cell phone is provided by the employer for business reasons (other than compensation), then it’s not considered a taxable fringe benefit.  For example, if the employer needs to contact the employee at all times, or if the employer requires the employee to be able to talk to customers while away from the office.
  • If there is no substantial business reason for the employee to carry a company cell phone but yet the employer chooses to provide it, then it is considered a taxable fringe benefit and must be reported as income on the employee’s W-2.

Contact us if you need further assistance on this topic.

Source:  IRS