Wages

Regular wages are paid by an employer for a payroll period either at a regular hourly rate (nonexempt employees) or in a predetermined fixed amount (exempt employees).

Supplemental wages are compensation paid to employees in addition to their regular wages.

Supplemental wages include but are not limited to:

• awards and prizes (for example, the Jane A. Morton Service Award)
• bonuses
• back pay
• commissions
• noncash fringe benefits (for example, club dues, automobile, lodging)
• overtime pay
• reported tips
• retroactive wage increases
• payments for nondeductible moving expenses
• severance pay
• sick pay paid by a third party as an agent of the employer (example: Paul Revere, Cigna, and The Hartford disability plans)

Gross wages are the total of all wages paid to an employee before any taxes, deductions, insurance premiums, and other withholdings.

Taxable wages are gross wages less any pretax deductions. Taxable wages can vary, depending upon the type of tax.

Federal Taxable Wages

Federal taxable wages are gross wages less premium conversion (insurance), contributions to flexible spending and health savings accounts, pretax parking deduction, and tax-deferred annuities.

Social Security and Medicare Taxable Wages

Social Security and Medicare taxable wages (also known as FICA taxable wages) are gross wages less premium conversion (insurance), contributions to flexible spending and health savings accounts, and pretax parking deduction. Tax-deferred annuities are not excluded from FICA taxable wages.

Nontaxable Wages

Nontaxable wages are not taxed, per IRS regulations. Nontaxable wages include, but are not limited to:

• inheritances, gifts, and bequests
• cash rebates child support payment