Are you preparing to file your quarterly wage report for unemployment insurance tax? If so, remember to include your company’s corporate officers. According to Idaho’s Employment Security Law, corporate officers are considered employees and as such, their compensation must be reported if they perform services for the corporation.
Corporate officers are high-ranking persons, such as presidents, vice presidents, and financial officers, with the day-to-day responsibility of running corporations.
Reportable wages includes all payments for services, including salaries, hourly pay, piecework pay, commissions, bonuses and the cash value of any payment in any form other than cash.
According to the Internal Revenue Service, corporations should not attempt to avoid payment of unemployment taxes by having officers treat compensation as “cash distributions, payments of personal expenses, and/or loans rather than wages.”
The fact that a corporate officer is also a shareholder does not change this requirement. Corporate officers who are also shareholders are required to report all wages in any form if they have not yet reported a fair market wage and have not opted out of the State Unemployment Tax Act (SUTA). Find more information on corporate officer opt-out criteria and fair market wage reporting here.
Examples of payments reportable as wages for the purpose of unemployment tax include:
Paid TO the officer:
Paid ON BEHALF of corporate officer:
- Personal bills
- Movie rentals
- Family dinner
- Mortgage payments
*Any compensation, monetary or otherwise, received by the corporate officer, including all non-business expenses charged to the corporation.
Additional unemployment tax information can be found here.
For questions, contact an Idaho Department of Labor local unemployment tax representative.