Vision Payroll

December 26, 2008

Question of the Week: Why Did My Federal Income Tax Withholding Increase?

This week’s question comes from Madeleine, an executive. I’ve averaged about 30% of my pay going toward federal income tax withholding each pay period. This week I had 35% of my pay withheld from my bonus for federal income tax. Why did my federal income tax withholding increase? Answer: In TD 9276, the IRS promulgated regulations covering supplemental wage payments paid by a single employer (or group of employers under common control) that exceeded $1,000,000 to a single employee in a calendar year. The American Jobs Creation Act of 2004 (Public Law 108-357) requires that withholding from such wages be at a flat rate of 35%. The regulations provide rules for determining whether wages should be considered regular wages or supplemental wages for withholding purposes. Contact Vision Payroll if you have any questions on TD 9276 and withholding on supplemental wages.

July 13, 2008

IRS Clarifies Withholding on Supplemental Wages

Filed under: News — Tags: , , , , , , , — Vision @ 1:05 pm

In Revenue Ruling 2008-29, the IRS clarified the amount of federal income tax to be withheld on certain supplemental wages. Situations covered include sales commissions, draws, signing bonuses, severance pay, annual leave, vacation and sick pay, and sick pay paid at a different rate. Contact Vision Payroll if you have any questions on this ruling.

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