Supplemental Pay Essentials – How to Correctly Withhold Tax Bonuses, Commissions, and Severance Pay

Duration: 90 Minutes
This webinar will help attendees distinguish between supplemental wage payments and regular wage payments and assist them to identify wage payments that are neither supplemental nor regular. It will detail methods used to compute withholding on supplemental pay and discuss the application of the rules and methods to specific payments and situations.
Product ID: 501084
Objectives of the Presentation
  • Distinguish between supplemental wage payments and regular wage payments and identify wage payments that are neither supplemental nor regular
  • Compute withholding using each of the methods specified for supplemental wages
  • Be aware of critical options and exceptions to the general rules
  • Understand common and not so common examples of supplemental pay and how the rules apply
  • Understand how the rules apply to severance pay, deferred compensation, and other post termination payments
  • Understand when the 25% flat rate may be used and when it is not allowed
  • Understand when the 39.6% flat rate must be used and how to apply it to supplemental wage payments
  • Learn how to avoid failure to withhold penalties
Why Should you Attend
Supplemental pay is employee compensation paid in addition to or in place of regular wages or salary. Examples include bonuses, commissions, and fringe benefits. Sometimes an employee receives more than one type of pay during a pay period and some of the pay overlaps or is attributable to multiple pay periods. Complying with supplemental pay regulations can be a headache for any payroll department. Incorrectly reporting supplemental wages can lead to costly penalties, fines and liabilities. Payroll departments often hear complaints of too much withholding from employees and sometimes too little withholding from highly compensated employees. The introduction of mandatory flat rate withholding for certain employees changed the definitions of supplemental and regular wages and created additional recordkeeping responsibilities for employers.

Computing an appropriate amount of withholding for supplemental pay can be a challenge. The rules for withholding from supplemental pay involve compliance issues for employers related to tracking supplemental wages paid to each employee during the calendar year, selecting the appropriate method to compute withholding from supplemental pay, and proper application of options and exceptions to the general rules. Failing to correctly apply the rules can result in costly penalties for failure to withhold the correct amount of tax.

This fast paced and detailed webinar will provide crucial information to effectively manage supplemental wage payments. It will discuss optional methods and when they may be used as well as the effect of Form W-4 claims and regular pay period on supplemental pay withholding.

Areas Covered
  • Definitions and examples of supplemental and regular compensation including optional treatment and exceptions
  • Why Congress distinguished supplemental pay and enacted special rules for computing withholding
  • Description of methods used to compute withholding on supplemental pay including examples
  • When optional methods may be elected and when they may not
  • When the mandatory flat rate method must be used and situations in which the employer has options
  • The effect of Form W-4 claims and regular pay period on supplemental pay withholding
  • Recordkeeping required for compliance with mandatory flat rate withholding rules
  • Penalties for failure to withhold and penalty avoidance
  • Application of the rules to specific examples of supplemental pay situations
Who can Benefit
  • Payroll Supervisors and Personnel
  • Payroll Consultants
  • Payroll Service Providers
  • Public Accountants
  • Internal Auditors
  • Tax Compliance Officers
  • Enrolled Agents
  • Employee Benefits Administrators
  • Officers and Managers with Payroll or Tax Compliance Oversight
  • Company / Business Owners
  • Managers/ Supervisors
  • Public Agency Managers
  • Audit and Compliance Personnel / Risk Managers.
$300
Recorded Session for one participant
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  • Upon purchase of the recorded session a link will be updated on your OCP Account within 24 hours
  • Please click on the link to access the Recorded Session
  • Presentation handouts in downloadable PDF format will be updated on your OCP Account within 24 hours of the purchase of the product
  • Download the Certificate of Attendance and Purchase Invoice from your OCP Account after 48 hours of the product Purchase
  • Please share your valuable Feedback at the end of the session
Instructor Profile:
Patrick A. Haggerty is a tax practitioner, author, and educator. His work experience includes non-profit organization management, banking, manufacturing accounting, and tax practice. He began teaching accounting at the college level in 1988. He is licensed as an Enrolled Agent by the U. S. Treasury to represent tax payers at all administrative levels of the IRS and is a Certified Management Accountant. He has written numerous articles and a monthly question and answer column for payroll publications. In addition, he regularly develops and presents webinars and presentations on a variety of topics including payroll tax issues, FLSA compliance, and information return reporting.
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