Q: Employees who are paid with paycards may incur fees for withdrawing cash from ATMs and other services. State legislation has been proposed that would require employers to reimburse those fees. Would the reimbursements be considered taxable wages?
A: The IRS can’t comment on proposed legislation. In general, however, these reimbursements couldn’t be considered de minimis, even though they may be in small amounts. These reimbursements are made in cash and cash is always taxable. You must tax and report these reimbursements as wages.