What Are Wages?

Wages are remuneration for services performed by an employee for an employer. Any payments that constitute remuneration for services will be subject to withholding. Payments that do not constitute remuneration for services will not be subject to withholding.  Whether the payment is via check, direct deposit, paycard or cash is irrelevant.

Much of this information comes from IRS Publication 525.

Specific remuneration categories and the related general withholding rules are noted below. State laws tend to follow the federal but state agencies should be contacted for definitive rulings.

 

                                       FIT     FICA    FUTA

Advanced earned income credit          No      No      No

Advances of pay                        Yes     Yes     Yes

Advances for ordinary business         No      No      No
expenses

Awards and prizes                      Yes     Yes     Yes

Awards of back pay                     Yes     Yes     Yes

Bonuses                                Yes     Yes     Yes

Business expense reimbursements under  No      No      No
accountable plan

Cafeteria plan cash benefits           Yes     Yes     Yes

Cafeteria plan qualified benefits      No      No      No

Commissions                            Yes     Yes     Yes

Contributions (employee) to benefit    Yes     Yes     Yes
plans

Contributions (employer) to benefit    No      No      No
plans

Contributions (employee) to profit     Yes     Yes     Yes
sharing plans

Contributions (employer) to profit     No      No      No
sharing plans

Contributions (employee) to 401(k)     No      Yes     Yes
plans

Contributions (employer) to 401(k)     No      Yes     Yes
plans

Death benefits                         No      No      No

Dependent care assistance (up to       No      No      No
$5,000 pursuant to qualified plan)

Director (non-employee) fees           No      No      No

Disability pay                         Yes     Yes     Yes

Dividends in lieu of compensation to   Yes     Yes     Yes
small business shareholders

Educational assistance, job related    No      No      No

Educational assistance, non job        Yes     Yes     Yes
related

Employee discounts                     No      No      No

Equipment, tool, and uniform           No      No      No
allowances

Flexible spending accounts             No      No      No

Fringe benefits unless excluded by     Yes     Yes     Yes
Code

Golden parachute payments              Yes     Yes     No

Group legal services                   Yes     Yes     Yes

Group medical insurance premiums       No      No      No

Group term life insurance (up to       No      No      No
$50,000) premiums

Guaranteed wage payments               Yes     Yes     Yes

Idle time payments                     Yes     Yes     Yes

Issuance of nonqualified stock options Yes     Yes     Yes

Issuance of qualified stock options    No      No      No

Jury duty pay                          Yes     Yes     Yes

Loans with obligation to repay         No      No      No

Lock out benefits                      No      No      No

Meals and lodging for convenience of   No      No      No
employer

Military leave pay                     Yes     Yes     Yes

Moving expense (goods and travel)      No      No      No
reimbursements

Partners' drawings and salaries        No      No      No

Payroll deductions                     Yes     Yes     Yes

Personal use of employer aircraft      Yes     Yes     Yes

Personal use of employer automobile    Yes     Yes     Yes
(unless de minimis fringe benefit,
working condition fringe benefit, or
qualified non-personal vehicle)

Probationary pay                       Yes     Yes     Yes

Property and non-cash payments         Yes     Yes     Yes

Retiree consulting fees                No      No      No

Retirement plan distributions          Yes     No      No

Retroactive wage increases             Yes     Yes     Yes

Royalties not tied to employment       No      No      No
contract

Salaries                               Yes     Yes     Yes

Scholarships and fellowships           No      No      No

Severance pay                          Yes     Yes     Yes

Sick pay                               Yes     Yes     Yes

Stock bonus plan distributions         Yes     No      No

Strike benefits                        No      No      No

Supplemental unemployment benefits     Yes     No      No
linked to state plan and in lump sum

Taxes of employee paid by employer     Yes     Yes     Yes

Tips                                   Yes     Yes     Yes

Travel expense reimbursements under    No      No      No
accountable plan

Use of employer athletic facilities    No      No      No

Use of employer eating facilities      No      No      No

Use of parking facilities (up to $165  No      No      No
per month)

Vacation pay                           Yes     Yes     Yes

Wages of deceased employee             No      Yes     Yes

Workers' compensation benefits and     No      No      No
premiums

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