Supplemental Wage Payments: Common Withholding Guidelines

Training Provided by Lorman Education Services nThis teleconference will assist you in evaluating your current income tax withholding practices to facilitate compliance with IRS regulatory changes and will offer practical tips to help ease administrative burdens. The program will educate you with respect to the issues involved in determining when wage payments should be classified as supplemental wages or regular wages, and the applicable withholding rules that apply to the payments. We will discuss the most common types of supplemental wages, such as commissions, signing bonuses, severance payments and sick leave, and explain the three approaches used for to determining the applicable withholding rate. Additionally, we will provide insight into the latest IRS regulations on the withholding of supplemental wage payments and have a practical discussion on the withholding issues surrounding less common supplemental wage payment matters, such as commissions paid at fixed intervals with no regular wages, commissions paid at fixed intervals in addition to regular wages paid at different intervals, draws paid in connection with commissions, and severance payments that are paid after the termination of employment. n nAfter attending this teleconference, you should feel better prepared to differentiate supplemental wages from regular wages and determine the applicable withholding approach. Moreover, you should have an increased awareness of techniques for resolving more complex withholding matters. n

Supplemental Wage Payments: Common Withholding Guidelines Agenda

1. What Are Supplemental Wages?
1. Definitions of Supplemental Wages vs. Regular Wages
2. Common Examples of Supplemental Wages (e.g., Commissions, Signing Bonuses, Severance Payments and Lump Sum Payments of Annual Leave)
2. Significance of Making the Proper Distinction Between Supplemental Wages and Regular Wages
1. Income Tax Withholding Implications
3. Determining the Applicable Withholding Rate on Supplemental Wages
1. Three Approaches
1. Mandatory Flat Rate Withholding
2. Optional Flat Rate Withholding
3. Aggregate Method
4. IRS Regulations on Income Tax Withholding on Supplemental Wages
1. Changes From Prior Regulations Due to the Enactment of the American Jobs Creation Act of 2004
1. New Mandatory Withholding Rate of 35 Percent on Supplemental Wage Payments in Excess of $1 Million
2. Change of the Definition of Supplemental Wages to Include Wage Payments to Employees, Where Such Employees Have Not Received Regular Wages
3. Change to Optional Flat Rate Withholding to Only Apply Where an Employer Has Withheld Income Tax From Regular Wages in the Current Year or Prior Calendar Year
5. Approaches to Help Employers Comply With the Requirement to Separately Track the Payment of Supplemental Wages
1. IRSs Allowance of Treating Wages in Box 1 of Form W-2 as Supplemental Wages for Administrative Efficiency
6. Payments Made by Agents of Employers
1. Payments Included in Determining Whether Mandatory Flat Rate Withholding Applies
2. De Minimis Rule
1. $100,000 Supplemental Wage Reporting Threshold
2. Exceptions to the De Minimis Rule
7. Practical Application of Supplemental Withholding and Common and Not so Common Examples

About The Training Provider: Lorman Education Services

More Payroll Training from Lorman Education Services

• Answers to Top 10 Common Payroll Questions
• Best Practices to Manage Your Multistate Payroll
• Form W4: Impact on Payroll
• Handling Federal Garnishments from Receipt to Termination
• Paperless Payroll: Essentials to a Seamless Transition
• Paycheck Calculation Basics
• Payroll Compliance
• Payroll Management
• Payroll Recordkeeping: What You Need to Know
• What the New Ledbetter Pay Act Means for Employers