When Do Wages Become Taxable?

There is often a lapse of time between the time wages are earned and the time they are actually paid. Wages are considered “constructively” (actually) received when funds are made available to an employee without substantial limitation. If paychecks are available to employees, but they do not pick them up, wages are taxable on the day when they could have claimed the checks. Occasionally an employee with request that a paycheck be postdated or backdated – this however does not alter the facts. The date of a check does not determine “constructive receipt” but rather the date the paycheck was made available.