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  • Hourly Incentive Pay

    Once a month, we pay hourly employees incentive pay based on plant results. This check is separate check on a different payday than the normal weekly check. What is the federal guideline for taxes withheld from the check. Does both checks gross pay have to be added and use that tax structure or can it be considered separtely?

  • #2
    Tax Withholding

    A supplemental payment may be taxed at a flat 25% rate or you can "add the supplemental and regular wages for the most recent payroll period this year. Then figure the income tax withholding as if the total was a single payment. Subtract the tax already withheld from the regular wages. Withhold the remaining tax from the supplemental wages. " This information may be found in Circular E at: http://www.irs.gov/publications/p15/ar02.html#d0e1572 It is under the heading of, "Supplemental Wages"

    You can get additional information about employee taxation at the following websites:

    http://www.americanpayroll.org/fedlinks.html and

    http://www.irs.gov/publications/p15a/ix01.html

    Let me know if you have any other questions.
    Lillian Connell

    Forum Moderator
    www.laborlawtalk.com

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