GLOBAL PAYROLL MAGAZINE
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Employers also may retain a tax deduction for making such payments. Unlike many other tax-free payments made to employees, there is no need for employees to substantiate how the payments were used so long as they reasonably correspond with the costs incurred. It is recommended that employers develop a program or plan should a qualifying event occur and it is decided such payments are necessary. Qualified payments likely will come from accounts payable outside the Payroll system since the amounts are not included as wages or compensation subject to employment taxes. Although there are few accounting requirements associated with Section 139 payments, employers have been advised to seek information to verify the payments are not covered by insurance, and to keep good records of the payments made to workers.
About the Author Michael Baer
Michael Baer is president of Baer Unlimited, an independent research,
analysis, and communications provider that helps Payroll modernize operations, stay compliant, and improve the use and security of their data. For more on these issues discussed above, contact him directly at mike.baer@baerunlimited.
com , or book Michael as a mentor through the GPA Mentor page .
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