Wages, Salaries, and Other Earnings Flashcards
What are wages, salaries, and other forms of compensation?
They are part of gross income reported on Form W-2, which employees receive by the end of January each year.
What should employees do if they receive a Form 1099-NEC?
They must report unpaid Social Security and Medicare taxes on Form 8919.
How should non-employee childcare providers report their income?
They should report their income on Schedule C and complete Schedule 1.
What income must U.S. citizens and residents report?
All income, including foreign income, unless exempt by law.
What must be included as income if someone receives advance commissions?
They must include them as income in the year received.
Are cost-of-living allowances taxable?
Most are taxable, except for federal employees stationed in Alaska, Hawaii, or overseas.
How should payments for back pay be reported?
They must be included in income and are typically reported on Form W-2.
Are bonuses or awards from an employer taxable?
Yes, they are taxable and should appear on Form W-2.
What is the tax treatment of severance pay?
Severance pay is taxable, including payments for canceled employment contracts and accrued leave.
Is sick pay from an employer taxable?
Yes, sick pay from an employer or benefits from a welfare fund are taxable.
How is disability income taxed?
If an employer pays the premiums, the benefits are taxable; if shared, only the employer-funded portion is taxable.
Are employer-provided accident or health plan benefits taxable?
Usually not, but benefits may be taxable depending on the source.
Are fringe benefits taxable?
Yes, unless specifically excluded by law or the employee pays fair market value for them.
What is the tax treatment of employer-paid group term life insurance?
Not taxable if coverage is $50,000 or less; excess coverage is taxable.
When is restricted property taxable?
Not taxable until restrictions are lifted, but can be included earlier with an 83(b) election.
