The IRS issues guidance on the treatment of military differential pay by employers.
1.Are differential wage payments made by employers to individuals while on active duty in the uniformed services of the United States for more than 30 days ”wages” for purposes of taxation under the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), and the Collection of Income Tax at Source on Wages (income tax withholding)?
2. How do employers calculate the amount of income taxes required to be withheld on differential wage payments?
3. What information return reporting requirements apply to differential wage payments?
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