SR Client Question: Is a salary advance taxable?
Some employers offer employees the option of requesting a salary advance ahead of the standard payment date; for instance, the paycheck would be issued on the first of the month, as opposed to the standard payday of the 15th of the month. In this case, while the advance received on the first of the month is in relation to wages that will be paid on the 15th of the month, the advance payment is considered wages and considered paid when constructively received.
Wages are considered constructively received when credited to the account of, or set apart for, the employee so that they may be drawn on at any time. Federal withholding tax, FICA tax and liability, FUTA liability, state and local tax and liability are based on the date the advance is paid.