How does an employer compute excess wages for the quarterly contribution report?
An employer pays taxes on the first $8,500 of wages paid to an employee in the calendar year. An example of excess wages for one individual follows: If an employee earned exactly $8,500 in the first quarter of the calendar year, the employer would have zero excess wages in the first quarter because the entire amount of wages is taxable. If the employee earned $7,000 in the second quarter of the same calendar year, the amount of excess wages in the second quarter would be $7,000 because the employer had paid taxes on the first $8,500 in the first quarter. Apply this calculation to all employees to determine excess wages for each employee, and then add excess wages for all employees. This grand total is entered as excess wages for your filing. For additional help computing excess wages, you may use the free Excess Wage Calculator in an Excel Spreadsheet format.
