Inclusions

  • Wages or salaries including retroactive wages or salaries
  • Commissions and draws against commissions
  • Bonuses including stock bonus plans*
  • Straight time portion of overtime*
  • Pay for holidays paid by employer*
  • Pay for vacations paid by employer*
  • Pay for sick pay-paid by employer*
  • Payments by an employer of amounts otherwise required by law to be paid by employees to statutory insurance or pension plans,  such as the Federal Social Security Act
  • Payments to employees for piece work, profit sharing or incentive plans
  • Payments or allowances for hand tools or power hand tools provided by employees and used in their work operations*
  • The value of lodging, other than an apartment or house, received by employees as part of their pay, to the extent shown in the employer’s records
  • The value of store certificates, merchandise, credits or any other substitute for money received by employees as part of their pay
  • Payments for salary reduction, retirement, or cafeteria plans (IRC 125) that are made through deductions from the employee gross pay
  • Davis-Bacon wages paid to employees
  • Davis-Bacon wages placed into third party pension trusts (wages paid above employee’s normal pay to meet prevailing wages for government jobs).*
  • Expense reimbursements to employees to the extent that an employer record does not substantiate that the expense was incurred as a valid business expense*
  • Jury Duty Pay
  • Amounts paid by employee to a qualified IRC 125 Cafeteria Plan (E) – CA
  • Employer contributions to stock purchases & deferred compensation – CA (E)
  • Travel Time – NJ (E)
  • Annuity Plans

Exclusions

  • Rental value of an apartment or house provided for an employee (permanent lodging – based upon comparable accommodations)*
  • The value of meals received by employees as part of their pay to the extent shown in the employer’s records*
  • Premium portion of overtime, premium pay is the extra money paid to employees for working overtime. If overtime is paid at time and a half,1/3 would be excludable as premium pay. If overtime is paid at double time ½ would be excludable as premium pay.*
  • Note, an overtime credit is not permissible in PA, DE, UT and NV. Also note that increased wages for time differentials such as extra pay for night shifts is not considered overtime.
  • Stock Options (Stock given as a bonus or as a substitute for a wage is chargeable)
  • Severance pay, (Accrued vacation is not considered severance pay).*
  • Third party sick pay.
  •  Payroll amounts imputed for life insurance provided by the employer.
  •  Expense reimbursement to the extent that the employer’s records substantiate that the expense was incurred as a valid business  expense and that the amount of each employee expense reimbursement is shown separately in the records of the employer.
  •  Moving expenses.
  •  Value of special rewards for individual invention or discovery.
  •  Tips and gratuities, (subject to State exceptions DE, NJ, PA excluded above the minimum wage)
  •  Payments by an employer to group insurance or pension plans.
  •  Payments for active military duty.*
  •  Employee discounts on goods purchased from the employee’s employer.
  •  Supper money for late work.
  •  Work uniform allowances.
  •  Employer provided perks such as: use of an automobile (taxable amount for personal use of auto.), an airplane flight, an incentive vacation (contest winner, etc), a discount on property or services, club memberships, tickets to entertainment events.*
  • Flex-Credits – when a specific amount is set aside for employees for the employee to purchase group insurance, any portion that is used to purchase the insurance is excluded. Any amount that the employee receives that is not used to purchase the insurance would not be excludable.