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North Country Alliance
Doing Business Guide.
Wages subject to Federal
employment taxes include all pay you give an employee for service performed.
The pay may be in cash or in other forms. It includes salaries, vacation
allowances, bonuses, commissions, and fringe benefits. It does not matter
how you measure or make the payment. Also, compensation paid to a former
employee for services performed while still employed is subject to employment
Tips your employee receives from customers are generally subject to withholding.
Your employee must report cash tips to you by the 10th of the month after
the month the tips are received. The report should include tips you paid
over to the employee for charge customers and tips the employee received
directly from customers. No report is required for months when tips are
less than $20. Your employee reports the tips on Form 4070, Employee Report
of Tips to Employer, or on a similar statement. The statement must be signed
by the employee and must show the following:
- The employee's name, address, and Social Security Number (SSN)
- Your name and address
- The month or period the report covers
- The total tips
Supplemental wages are compensation paid in addition to the employee's regular
wages. They include, but are not limited to, bonuses, commissions, overtime
pay, payments for accumulated sick leave, severance pay, awards, prizes,
back pay and retroactive pay increases for current employees, and payments
for current employees, and payments for nondeductible moving expenses.