TAX QUESTIONS? YOU ASK LAH!

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Q: Do compensation and gratuities that are tax-exempt need to be reported in Form EA? If yes, do they need to be included in Part F of the Form EA?

A: Yes, compensation and gratuities that are tax exempted still need to be reported in Form EA as they are considered gross income from employment. The amount of tax-exempt compensation and gratuities should not be reported in Part F of Form EA. However, the employer must attach the calculation of compensation and gratuities for the employee's reference so that the employee knows how much of the income can be exempted from tax.  

Wishing you plentiful tax savings!

Zen Chow

YYC Tax Guru

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