Wages-In-Kind (WIK)
Definition
Wages in Kind (WIK), also known as non-wage compensation, are non-salary (wage) compensation that is paid to or received by an employee in addition to their regular salary.
For example, a business vehicle is provided to an employee for his/her use. All business use is non-taxable, but any personal use is taxable. Some other examples of WIK include, but are not limited to, cash awards, gift certificates, football/basketball tickets, taxable moving expenses, etc.
Cash
All cash items and items that can be converted to cash, including gift certificates, are subject to the following taxes:
- Old age, survivors and disability insurance (OASDI), traditionally referred to as Social Security.
- Hospitalization Insurance (HI), traditionally referred to as Medicare.
- Federal Income tax at 25% regardless of what is being claimed on W-4
- State Income tax at 6%, regardless of what is being claimed on NC-4.
Non-Cash
University Payroll deducts only Social Security and Medicare taxes (OASDI & HI) on non-cash awards (such as season tickets to sporting events or complimentary parking) at the rates shown above.
Although federal and state taxes are not withheld on non-cash items, the gross amounts are added to the recipients' federal and state gross wages on their Form W-2 and are taxable when they file their annual tax returns.
Some of the frequently seen Wages in Kind (WIK) are:
Non-wage Compensation Reporting and Taxation Matrix
