|
Wages Defined in Detail
The term "wages" includes:
- All remuneration paid for personal service, including bonuses and commissions paid to all workers of all ranks, including corporate officers.
- The cash value of all remuneration paid in any medium other than cash.
- All tip income.
- Reasonable compensation for services provided, including K-1 distributions.
- Monies paid for time lost due to sickness or accident, unless paid out of benefit funds or other special accounts.
- Expense allowances, which are not regularly and reasonably segregated.
- Dismissal wages, which do not represent the worker’s interest in a pension fund.
- All monies paid before any deductions for such items as lodging, union dues, employee payments to pension or benefit funds, social security tax, and premiums on group insurance.
Types of Wages
An incomplete list of wages and payments and their treatment under UI law.
Non-Taxable Wages
When computing your tax, count only the first $7,000 of a worker’s wages for the calendar year. If you pay wages to a person in another state and that person transfers to South Carolina during the same calendar year and receives wages from you, add those wages to the wages paid to that person in the other state to arrive at the $7,000 limitation. If you acquire all or a part of the business of another liable employer during the calendar year and kept a worker formerly engaged by the other employer, you may count the wages paid by the other employer to the worker in computing the "first $7,000" for his wage reports.
Note: Report wages as instructed by the back of Form UCE-120.
SCWages Program
This software is available to employers free of charge. It enables them to file their quarterly contribution and wage reports electronically.
SC Wages Hand Book
SC Wages Check List
Payments Not Considered Wages
Wages Considered "Paid"
Our policy outlining when to consider wages for tax reporting purposes follows. Our policy only applies to the reporting of wages for UI Tax purposes. Do not confuse this policy with the reporting of a claimant’s earnings during a week a claim is filed.
An employer can use two methods to report wages:
- Constructive Receipt
- Constructive Payment
An employer must consistently use either of these methods for all members of a class or classes for Unemployment Insurance Wage Reporting.
Constructive Receipt:
"Constructive Receipt" occurs on the established "pay day." An employer, by his policy, historically pays employees on an established "pay day" and the reporting period is determined by the quarter in which the "pay day" occurs. This is determined to be the day the wage earner derives an absolute right to the wages.
Constructive Payment:
"Constructive Payment" occurs on the established "check date." An employer, by his policy, historically pays employees and reports earnings using the "check date." The employer, for accounting purposes, uses the paycheck date for determining the reporting period or quarters.
Sub-Chapter S Corporation
An S Corporation is a legal entity (corporation) that elected, by unanimous shareholder consent, not to pay any corporate tax on its income (except certain passive investment income and, under certain conditions, built-in capital gains).
Items of income, loss, deduction, and credit are passed through the S Corporation to the shareholder on a pro rata basis. The items are then reported on the shareholder’s tax return in the shareholder’s tax year that includes the end of the corporation’s tax year. Therefore, a corporation registered as an S Corporation with the Internal Revenue Service is treated similar to a sole proprietor or a partnership for the purpose of identifying taxable wages by DEW.
Salaries to Officers
An active officer is one performing services for the S Corporation. Active officers may also be the corporation’s principal shareholders. They are to be counted as employees of the corporation in meeting liability requirements in the same manner as regular corporations.
An S Corporation may or may not pay salaries to participating (active) officers.
Pursuant to Sections 41-27-230 and 41-27-380 of DEW law, such services constitute employment and any salaries or profit distributions should be considered "remuneration paid for personal services," thus falling within the definition of wages.
FUTA Tax Credit
Federal Unemployment Tax Act (FUTA) lets employers credit contributions paid under state unemployment compensation laws against their federal unemployment tax liability. If an employer doesn’t pay state taxes, he must pay the federal unemployment tax in full. However, paying the federal unemployment tax doesn’t relieve the employer of his obligation to pay state taxes. When a South Carolina employer becomes liable under the Department of Workforce & Employment law, the employer is required to file quarterly contribution reports and pay the assessed taxes.
Work Opportunity Tax Credit
DEW is responsible for the overall organization, management, and monitoring of WOTC. The program’s purpose is to provide jobs for persons who have the most difficulty in securing employment by giving employers a tax credit for hiring them.
WOTC Brochure
|
