Withholding for On-Demand Pay

If you allow employees to access their pay before the usual payday, when do you withhold taxes on the pay? Is this a loan to an employee? These questions are not yet settled. The Treasury’s Green Book, which explains the Administration’s 2024 fiscal year budget proposals, says Congress should amend the Tax Code to provide that on-demand pay arrangements aren’t loans and that they should be treated as weekly payroll periods even if employees can access wages during the week. Monitor developments about on-demand pay arrangements if you plan to offer them or already do so.  #IdeaoftheDay

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