IRS Publication 15 — Employer's Tax Guide (Circular E)
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“Withhold. T axable. T axable.”
Noncash wages, including commodity wages, are treated as cash wages if the substance of the transaction is a cash payment. Noncash wages treated as cash wages are subject to social security tax, Medicare tax, and federal income tax withholding. Report the value of noncash wages in box 1 of Form W-2 (box 7 of Form 499R -2/W-2PR) together with cash wages. Noncash wages for farmwork are subject to federal income tax unless a specific exclusion applies. Don’t show noncash wages in box 3 or 5 of Form W-2 (box 20 or 22 of Form 499R -2/W-2PR), unless the substance of the 18 Publication 15 (2026)
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