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Publication 535 2001 Tax Year

Introduction

You can generally deduct the pay you give your employees for the services they perform for your business. The pay may be in cash, property, or services. It may include wages, salaries, vacation allowances, bonuses, commissions, and fringe benefits. This chapter provides information about deductions allowed for various kinds of pay.

For information about determining who is an employee and about employment taxes on your employees' pay, see Publication 15, Circular E, Employer's Tax Guide, Publication 15-A, Employer's Supplemental Tax Guide, and Publication 15-B, Employer's Tax Guide to Fringe Benefits. For information about deducting employment taxes paid on your employees' pay, see chapter 6.

TaxTip: You can claim the following employment credits if you hire individuals who meet certain requirements.


  • Empowerment zone employment credit.
  • Indian employment credit.
  • Welfare-to-work credit.
  • Work opportunity credit.

However, you must reduce your deduction for employee wages by the amount of any employment credits you claim. For more information about these credits, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities.

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