What is a Reportable Payment?
Reportable payments are payments to or on behalf of an individual that must be “reported” to the government as income recieved. Reportable payments are tied to the relationship the individual has with the RF (payment classification).
Generally, all payments to or on behalf of the individual are taxable and reportable unless there is an Internal Revenue Service (IRS) rule that exempts the payment from taxation or excludes the payment from taxable reportable income.
Reportable items can include, but are not limited to, bonuses or lump sum payments, gift cards, gift certificates, living allowances. They could also be the value of benefits provided in which the recipient gains personal use such as personal use of a company vehicle.
“Reported” means the RF is required to and will provide a tax statement at calendar year end to the payment recipient and also send the data to the government.
Examples of some payments that may be excluded from tax or reporting if documentation meets certain IRS guidelines:
- Business travel expenses for an employee or independent contractor
- Qualified moving expense reimbursements paid to a third party as an incentive for an employee to start work at the RF
- Qualified job related training or education for an employee
Most regulations on excludible rules are tied to service worker (employee or independent contractors) payments. You can reference IRS publications IRS Publication 15-B “Employer’s Tax Guide to Fringe Benefits" and the IRS FSLG Fringe Benefit Guide for more information.