Wages or not?
- Advances - Advances against future earnings are wages when paid.
- Annuities - Payments made by the employer into a fund for retirement or death benefits are not wages, if the payment was made under a plan offered to all employees or a class or classes of employees.
- Back Pay - If paid as a result of a dispute related to employment, these payments are wages.
- Bonuses - Bonuses are wages when paid. If bonuses are other than cash, report the actual value of the item as wages.
- Commissions - Commissions are wages when paid. An exclusion does exist for commissions paid to real estate brokers and direct sellers where there is no guarantee of a minimum salary.
- Corporate Officer Payments - Corporate officers performing a service for the corporation (includes subchapter S corporations) are employees. You must report their wages. (See Profit Distribution).
- Director Fees - Fees paid to directors of a corporation for attending meetings of the board of directors are not wages.
- Dividends - See Profit Distribution.
- Employee Benefit Plans - All employee benefit plans, including those paid by the employer, are reportable as wages, except plans paid for by the employer and established for employees for retirement, sickness or accident disability, medical, hospitalization or death. Employees may not elect to receive cash instead of coverage.
- Employee Expense Reimbursement - Payments made to reimburse an employee for business
expenses are not wages if certain rules are followed. Each reimbursement must
be entered separately in the business records and you must have documentation
that the expense was incurred while conducting business. The reimbursement may
not be based upon a percentage of the employee's wage, nor can it replace the
customary wage for the occupation. You must base the reimbursement upon
actual, receipted expenses, or you may base it upon the amount allowed to
state employees. State employees receive the following amounts for
non-receipted expenses:
- Meal expenses per day = $23 (in state), $28 (out of state)
- Lodging expenses per day = $50+tax (in state, May 15-October 15), $35+tax (in state, October 16-May 14), $50+tax (out of state, year round)
- Mileage reimbursement per mile = $0.36 or lower
- Equipment Rental Payments - Payment for rental of equipment
owned by the employee are not wages if the equipment is necessary for the
employee to perform the job, the employment contract provides for the rental
payments, the reimbursement is entered separately in the employer's records
and the reimbursement does not replace the customary wage for the occupation.
Rental payments for light equipment furnished by the employee may not exceed
the reasonable rental value of that equipment. Chain saw rental may not exceed
$22.50 per day.
Rental payments for heavy equipment, such as semi-tractors and skidders, may not exceed 75% of the employee's gross renumeration. Payments made for hand tools commonly used in the employee's trade, and vehicles used only for carrying the worker to and from the job site, are wages.
- Gifts - Gifts to employees are wages. Report the actual value of the item.
- Gratuities - See Tips.
- Holiday Pay - Payments made to employees for holidays or vacations are wages when paid.
- Income Tax Withholding - Withholdings from an employee's wages for federal and/or state income taxes does not reduce reportable wages.
- Insurance Premiums - Premiums paid by the employer for sickness, disability, medical or hospital expenses are not wages if the payment was made under a plan established for all employees or for a specific class or classes of employees. Premiums deducted from the employees' gross wages are reportable as wages.
- Loans - Payments designated as loans in the employer's records are considered wages unless the employee is to repay the loan under a written schedule agreed to by the employer and the employee.
- Meals - See Room and Board.
- Mileage - Allowable amount per mile is equal to the prior year's IRS mileage amount.
- Partner's Earnings - Distribution of profit to business partners is not wages.
- Profit Distribution - Distribution of profit to sole proprietors and partners is not wages. Payments distributed to corporate officers or shareholders in lieu of reasonable compensation for services performed are wages, even though designated as profits or dividends.
- Room and Board - The cash value of room and board is wages, and must have a value of at least $130 per week according to department rules. Meals furnished by the employer to the employee are considered wages. A cash value of at least $3 must be established for the provided meals.
- Separation Pay - Payments for termination, severance, separation or other similar payments are wages.
- Severance Pay - See Separation Pay.
- Sick Leave Payments - Sick leave payments are wages, even if not paid by the employer but by a third party such as an insurance company, for six months after the last month employee worked.
- Social Security Taxes - Deductions from an employee's gross wage for FICA (i.e. Social Security Taxes) do not reduce reportable wages.
- Subsistence - See Employee Expenses.
- Termination Pay - See Separation Pay.
- Tips - Tips are wages if distributed by the employer via a tip pool; added to the bill, or reported to the employer by the employee. Allocated tips are not reportable as wages.
- Vacation - See Holiday Pay.
- Vehicles - Personal use of a company vehicle is wages and the value must be reported as wages.
