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Payments to Employees Virginia

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  • Payments to Employees Virginia

    Hey, guys!

    Been about...3 years since I've been in payroll. Got a small CPA firm now and am helping another practice out to clean up some of the business. One of the issues is related to payroll and I'm BEYOND rusty on the rules.

    One of the clients there keeps cutting checks to employees. They're extremely non-descript on the reasons, and I'm about to come down hard on them. I can't think of any scenario where payments from the business to employees (unless it was a reimbursement) would be non-taxable.

    Thinking ahead to some of the objections/questions that will be raised: if an owner pays an employee extra cash (even out of a personal account), even if it is ostensibly to help them with a bill or something, wouldn't that still be taxable income? I feel like there's some principle of "but for the employee relationship this would not be happening".

    Any guidance you all can provide and possibly a reference?