How is the amount of average annual wages determined?
The amount of average annual wages is determined by first dividing (1) the total wages paid by the employer to employees during the employer’s tax year by (2) the number of the employer’s FTEs for the year. The result is then rounded down to the nearest $1,000 (if not otherwise a multiple of $1,000). For this purpose, wages means wages as defined for FICA purposes (without regard to the wage base limitation). See Q&A 12-14 for information on which employees are not counted as employees for purposes of determining the amount of average annual wages. Example. For the 2010 tax year, an employer pays $224,000 in wages and has 10 FTEs. The employer’s average annual wages would be: $22,000 ($224,000 divided by 10 = $22,400, rounded down to the nearest $1,000) 11. Can an employer with 25 or more employees qualify for the credit if some of its employees are part-time? Yes. Because the limitation on the number of employees is based on FTEs, an employer with 25 or more employees could qualify fo
