Wages include all cash payments made to employees for services rendered, including salaries, commissions, vacation allowances, fees, bonuses, back pay and many fringe benefits. The form in which payment is made, when it is made, or on what measurement of production it is based does not determine what comprises an employee's wages. Wages also include the cash value of other benefits paid, such as the reasonable value of food or lodging allowed to an employee as part of the employment relationship.
Certain payments and benefits are considered exempt under the Federal Unemployment Tax Act, for example, cafeteria plan contributions are only exempt in about half the states. Necessary business expenses incurred as a result of employment activities and reimbursed or advanced to employees, such as per diem allowances and traveling or moving expenses, are usually not considered taxable wages. If properly documented on separate detailed records, most states will consider such payments exempt, even if not specifically exempted by law or regulations.
