Instructions for Excess Wage Computation

Taxable Wages are the first $7,000 paid to each covered employee during the calendar year (1-1-YR - 12-31-YR).

Excess Wages are wages paid over $7,000 to an employee during the calendar year. Excess wages are not taxable wages.

Only the first $7,000 paid to an employee by the same employer in a calendar year is taxable.

Wages reported to another state within the same calendar year should be included in determining excess wages.

If you are a legal successor, the wages paid by your predecessor during the calendar year should be included in determining excess wages.

Wages must be reported on the Employer’s Quarterly Report (UCT-6) in the quarter in which the wages were paid.

• The sum of all amounts exceeding $7,000 per employee (excess wages) is entered in ITEM 3 of the Employer’s Quarterly Report. THIS SUM CAN NEVER BE LARGER THAN THE GROSS WAGES (ITEM 2).
• ITEM 3 (excess wages) is then subtracted from ITEM 2 (gross wages). The result is entered in ITEM 4 (taxable wages).
• ITEM 4 is multiplied by the assigned tax rate to arrive at the tax due (ITEM 5). AN EMPLOYER’S QUARTERLY REPORT MUST BE FILED EVEN WHEN ALL WAGES ARE EXCESS AND NO TAX IS DUE.