Unemployment Insurance Handbook for Employers (UCB-201-P)
Section 2 - Tax

PART 3 - Taxability of Wages

A. Definition of Wages

"Wages" means every form of payment directly or indirectly payable by an employing unit to an individual for personal services. This includes salaries, commissions, vacation pay, dismissal pay, bonuses, tips, certain fringe benefits, and payments in kind and any other similar advantage received from the employing unit, whether paid directly or indirectly. It may also include rent, housing and meals. Tips are only taxable to the extent declared in writing (accounted for) by the employee to the employer.

Wisconsin adopted the federal definition of wages for UI tax purposes as of 1/1/93 with two exceptions:

Report wages in the calendar quarter in which they are paid or constructively paid. Constructive payment occurs when your employee has the option of receiving payment but instead chooses to defer payment.

Casual Labor

Casual labor is a common term used in the employer community to describe workers performing a variety of services, usually on a temporary or part-time basis.

Workers hired for an hour, a day, a week, or for part-time services are typically employees. There is no provision in the law that excludes a worker from employment solely because he or she works less than full-time. The following types of workers have been referred to as casual laborers and are reportable for unemployment insurance purposes.


B. Fringe Benefits

1. Deferred Compensation

Taxable:

Not Taxable:

2. Section 125(b) (Cafeteria Plans)

Taxable:

Not Taxable:

3. Sickness or Disability Pay

4. Employee Portion of FICA Taxes

5. Payment in Kind

Compensation paid in any form is taxable wages (unless specifically excluded, such as expense reimbursements or employee moving expenses). Some common types of payment in kind are; housing, meals, merchandise discounts, transportation, employee contest prizes, personal use of a company car and club memberships. This list is not all-inclusive.

The tax status of the following types of payment in kind changed effective January 1, 1993.

Meals and lodging may be nontaxable, but the following criteria must be met:

  1. It is furnished on behalf of the employer.
  2. It is for the convenience of the employer.
  3. It is on the employer's premises.
  4. Your employee is required to accept it as a condition of employment (lodging only).

Despite this general rule, all in-kind payments for agricultural labor remain taxable.


6. Value of Room and Meals

DWD 101 states for purposes of s.108.02(26) (wages), the employer shall value lodging and meals at the actual value or, if the actual value is not available, the employer shall make a reasonable estimate of the value.

If the actual value or reasonable estimate is not available, the department shall value lodging and meals as follows:

If actual value or reasonable estimate is not available:
(1) Lodging $105.00 per week or $15.00 per day;  
(2) Meals $86.00 per week, $12.30 per day or $4.10 per meal.



Updated: September 11, 2014

Content Contact: UI Tax

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