Example of Wage Basis Rules

Let's look at an example of how an employee's earnings included in the wage basis rules vary depending on the work location of the employee.

Brittany is a salesperson who receives a salary of 2,000 each month. Brittany also has a company car she drives. Brittany works in her company's East Coast district, and she spends 50 percent of her time in New York and 50 percent of her time in Pennsylvania. Last month, Brittany reported personal use that equated to 100, (50 personal use in New York, and 50 personal use in Pennsylvania).

The tax rules for each region she works is as given here:

• In New York, imputed earnings such as personal use of company car amounts are included in the taxable wages.
• In Pennsylvania, imputed earnings such as personal use of company car amounts are NOT included in taxable wages.

This table shows the tax calculations that apply for each region.

Tax Calculations Depending on Work Location

Region	Earnings in Salary	Eligible Imputed Earnings	Taxable Amounts	Deduction Amount
New York	1000	50	1050	35
Pennsylvania	1000	(50-Exempt)	1000	30

This table shows the wage basis rules for this tax calculations.

Wage Basis Rules

Region (Reference Value)	Primary Classification	Secondary Classification	Use in Wage Basis?
New York	Standard Earnings	Regular	Y
New York	Imputed Earnings	Personal Use of Company Car	Y
Pennsylvania	Standard Earnings	Regular	Y
Pennsylvania	Imputed Earnings	Personal Use of Company Car	N