According to IRS Publication 15, supplemental earnings are payments made to a worker outside their regular wages. They include things like:
- severance pay
- back pay
- reported tips
If the payment is a separate payment from your team members’ regular wages, you can withhold federal income tax at a flat rate of 22 percent. When you run bonus payroll through Workful, we’ll withhold federal income tax at this rate, unless you change the taxation method in advanced settings for the payroll run.
No matter how income taxes are calculated, your team’s supplemental wages will still be subject to Social Security and Medicare taxes.