Get Supplemental Compensation Part-time (FIELDS).pdf

What qualifies as supplemental pay? Overtime pay. Overtime pay is money, in wages, earned by an employee who works any time beyond a 40-hour workweek. ... Accumulated sick leave. ... Severance pay. ... Retroactive pay increases. ... Bonuses. ... Equity pay.

Supplemental wages These wages generally include commissions and bonuses, any severance payments upon termination of your employment, taxable prizes and awards, retroactive pay increases, reimbursements of nondeductible moving expenses, taxable fringe benefits and certain kinds of expense reimbursements and allowances.

Severance pay tax is the same as regular income tax. The IRS treats severance pay as supplemental wages, meaning they are subject to income tax withholding. Employers typically apply a flat tax rate of 22% for supplemental wages, including severance pay.

For federal purposes, employers may opt to use a flat tax rate of 22% on supplemental wages up to $1 million for the year; however, a mandatory flat tax rate of 37% applies to supplemental wages over $1 million.

Supplemental wages are all wages paid by an employer that are not regular wages. Supplemental wages include wage payments made without regard to an employee's payroll period, but also may include payments made for a payroll period.

Please note, employers do have the option to treat overtime pay and tips** as regular wages instead of supplemental wages. The following generally do not qualify as supplemental wages: Stipends. Paid time off (PTO) Vacation pay.

Supplemental wages are additional payments made to an employee outside of their regular wages. They include overtime, bonuses, commission, and more. If an employer provides supplemental wages, they may be required to withhold taxes from these payments.

Identify supplemental wages separately from regular wages and withhold a flat 22% (as of 2024). If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages and calculate the tax withholding.