Compensation for Services
Income Earned from Working
Compensation for services includes wages, salaries, bonuses, commissions, tips, fringe benefits, and noncash payments received for performing work. Tax law generally taxes compensation regardless of whether payment is made in cash or property.
- Hourly wages and salaries
- Performance bonuses
- Sales commissions
- Cash and reported tips
- Taxable fringe benefits
- Property or services received instead of cash
Note
Receiving property or services instead of cash does not avoid taxation. The fair market value is generally included in gross income.
Summary
Most compensation received for performing services is taxable, regardless of the payment method.