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Free employer resource · Benefit review

What is the benefit worth?

Document an item’s fair market value before deciding how much belongs in taxable income. Add multiple items for one employee, without entering their identity.

The general rule asks what an unrelated seller would charge for a comparable benefit on comparable terms. Your employer’s cost and the employee’s personal opinion are not automatically that value. Record the item’s condition, location, valuation date and whether the benefit is ownership, use or a service. Read the valuation regulation.

How to support a value
  1. Identify the exact benefit and the date it was available. For use of property, compare a comparable use or lease period.
  2. Gather independent current prices for a comparable item, condition and terms. A quote, market listing or documented sale may support your review; a simple average is not automatically fair market value.
  3. Document differences and select a supportable value. Keep evidence in your authorized records; do not paste employee names, account numbers or confidential documents here.
  4. For cash equivalents, review the face amount and applicable rules. A discounted purchase does not automatically reduce a gift card’s value. Do not assume a small cash equivalent is a de minimis benefit.
Benefits that need a different method

Group-term life insurance, personal vehicle use, aircraft, equity and deferred compensation can involve special valuation, timing or reporting rules. Select “Special-rule benefit” to hold a row and use the Benefit Guide or the applicable official method. This worksheet does not replace those calculations.

Build a benefit-value worksheet

Amounts are in US dollars. Quantity is the number of items provided to this one recipient. Recipient payments and exclusions are totals for that entire row, not per-item amounts. Do a separate review for another employee.

Review before calculating

Before adding it to payroll

Reconcile any amount already reported. Confirm the relevant federal, state and local tax treatment, reporting period and employment-tax bases separately. A noncash inclusion does not mean another cash payment. Employee gross-up payments require their own review.

Benefit Guide · Understand your pay · IRS Publication 15-B (2026)

Official guidance checked 11/03/2026. The rule depends on facts and benefit type. This page keeps inputs in memory and sends no worksheet amounts to a provider.