Earnings are ”constructively received” by an employee when the employee is entitled to payment under regular payroll procedures and when the funds are set apart, even though the employee is actually paid at a later time.
For example, in June a payroll check is issued to an IMRF member, but the check is returned because of an error. In July, a replacement check is issued to the member. You should report the amount as a June payment.
If you delay payment to an employee at the employee’s request (such as delaying wage payments until next calendar year), the amount is considered to be constructively paid to and received by the employee in the year the employee was entitled to payment, not the year paid. The amount should be reported to IMRF for the month the employee was entitled to payment, and included on the W-2 form for that year, not the year paid.
For example, an IMRF member asks you to delay a December 2011 wage payment until January 2012. The amount should be reported to IMRF for December 2011 and not January 2012. Also, the amount should be included on the W-2 form for 2011, not 2012.
However, if an employment contract provides that the payment shall be delayed, it constitutes earnings when paid. You would report it to IMRF for the month in which the employee received the payment.