Metropolitan commuter transportation mobility tax (MCTMT) - payroll expense definitions
Payroll expense
Generally means a covered employee's wages and compensation that are subject to either Social Security or railroad retirement tax, but with no annual cap applied.
- Specifically, payroll expense for covered employees subject to federal Social Security taxes means the total wages and compensation as defined in Internal Revenue Code (IRC) § 3121, without regard to IRC § 3121(a)(1). Payroll expense for covered employees subject to the railroad retirement tax means the total wages and compensation as defined in IRC § 3231, without regard to IRC § 3231(e)(2)(A)(i).
- In computing payroll expense, the annual cap of the amount of wages and compensation of covered employees subject to Social Security tax contained in IRC § 3121(a)(1) and the railroad retirement tax contained in IRC § 3231(e)(2)(A)(i), does not apply.
Note: Under IRC § 1402, income from certain employment is treated as income from a trade or business and is reported on federal schedule SE as net earnings from self-employment. Accordingly, the income is included in an individual's computation of net earnings from self-employment allocated to the MCTD, and therefore, is not included in the employer's payroll expense.
Types of employment treated as a trade or business under IRC § 1402 include but are not limited to:
- services performed by a United States citizen employed by a foreign government, the United Nations, or other international organization;
- services performed by a church employee if the church or other qualified church-controlled organization has a certificate in effect electing an exemption from employer Social Security and Medicare taxes; and
- qualified services performed by a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader.
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