Payroll

Payroll Exclusions

Since “remuneration” (payroll), is the basis of premium for workers compensation insurance, it is important to take all the deductions you are entitled. In most states, the following items should be removed from the audit:

Tips and other gratuities received by employees.

Payments made by an employer: To group insurance or group pension plans for employees. Into third-party pension trusts for the Davis-Bacon Act or a similar prevailing wage law, provided the pension trust is qualified under IRC Sections 401(a) & 501(a).

The value of special rewards for individual invention or discovery.

Dismissal and severance payments except for time worked or accrued vacation.

Payments for active military duty.

Employee discounts on goods purchased from the employee’s employer.

Expense reimbursements to employees to the extent that an employer’s records substantiate that the expense was incurred as a valid business expense.

Supper money for late work.

Work uniform allowances.

Sick pay paid to an employee by a third party such as an insured’s group insurance carrier that is paying disability income payments to a disabled employee.

Stock options.

Premium overtime.

Limitation excess for executive officers, both active and inactive.

Employer contributions to salary reduction, employee savings plans, retirement, or cafeteria plans (IRC 125).

Employer provided perks such as automobile allowances, club memberships, discounts on property or services, airplane flights, incentive vacations, and tickets to entertainment events.