Are payments taxable if an individual isn’t yet an employee? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Are payments taxable if an individual isn’t yet an employee?

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Q: When does the employer/employee relationship begin? My boss believes that relocation expenses don’t need to be reported on a W-2 form because they’re paid before an employee begins working.

A: Any advance payment for services to be performed is taxable wages. However, relocation expenses don’t need to be reported on a W-2 to the extent they’re not taxable: They reimburse employees for their direct moving expenses and their traveling expenses, including lodging, but not meals.

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