| Estimating payroll is an all-important feature of | | | | wages, these can be deducted. |
| workers’ comp insurance as your premium | | | | |
| payment is pegged to figures. Part of the audit | | | | 8. Reimbursed expenses shown in income with |
| process determines whether an employer’s payroll | | | | actual records of the expense submitted is excludable |
| figures were accurate. If you under-estimated, there | | | | from the premium base in many states. IRS rules |
| are additional premiums to pay. On the other hand, if | | | | often require including certain expenses the insurance |
| you over-estimate, you may receive a refund. | | | | industry does not include, so let the auditor know |
| However, it’s better to estimate payroll figures as | | | | about such reimbursements so allowable deductions |
| close to actual figures as possible. | | | | can be excluded. |
| | | | | |
| 14 Common Adjustments | | | | 9. Military pay is excludable from the premium base |
| 1. Pretax deductions, also known as section ,125 | | | | in many states, so if you continue to pay employees |
| 129 deductions are deducted from the premium base | | | | who are in the service document these payments so |
| in California ONLY. Other states include section 125 in | | | | the auditor can review them. |
| premium base. California employers should be sure to | | | | |
| have this information summarized so it can be | | | | 10. Stock options are excludable from the premium |
| deducted from the exposure totals for their policy. | | | | base in many states. |
| 2. Tips paid are a form of third party pay and is | | | | |
| excludable from the premium base in many states. | | | | 11. Holiday/vacation/sick pay are excludable from |
| Remember tips and service charges are different – | | | | the premium base in some states such as Kansas, as |
| tips are paid directly to employees by customers, | | | | long as actual amounts are documented for specific |
| where service charges are paid to the employer. Only | | | | pay that is vacation pay. |
| tips can be excluded. | | | | |
| | | | | 12. Residuals from commercials and motion pictures |
| 3. Severance paid is excludable from the | | | | can be excluded in most states. |
| premium base in many states. | | | | |
| | | | | 13. Expense reimbursements reported as income is |
| 4. Overtime dollars paid are excludable from the | | | | excludable from the premium base in many states. |
| premium base in many states. | | | | |
| | | | | 14. Stock bonuses are included in the premium |
| 5. Value of Group term life over $50,000 are IRS | | | | base in many states, so if these amounts are available |
| imputed income and excludable from the premium | | | | the auditor can review them. (workersxzcompxzkit) |
| base in many states. | | | | |
| | | | | As you see , there are many different rules in each |
| 6. Fringe benefits that are IRS imputed income, | | | | of the 50 states offering some significant |
| such as personal use of an auto, are excludable from | | | | opportunities to reduce your workers’ |
| the premium base in many states. | | | | compensation premiums. Work very closely with your |
| | | | | auditor to make your audit as accurate as possible! |
| 7. 3rd party sick pay is excludable from the | | | | |
| premium base in many states, because the payments | | | | Resources: State’s laws: |
| are made directly from the 3rd party payer to the | | | | Visit: for more help and information. |
| employee - the employer does not make these | | | | |
| payments, although in some cases they are included in | | | | Extracted from Workers’ Comp Kit® Blog. |
| the employers’ records. If included in the gross | | | | |