IRS Provides Guidance on Proper Income Tax Withholding for Nine Common Supplemental Wage Payment Scenarios

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The IRS issues guidance on methods for calculating taxes on such supplemental wages as commission payments, vacation/ sick pay cash outs, hiring bonuses and severance as follow up to its 2006 regulations. Some guidance, intuitive and others not so, warrants making sure payroll coding processes are reviewed to reflect these interpretations.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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