The Tax Cuts and Jobs Act of 2017 changed the supplemental rate for the first time in many years. However, it did not change the basic requirements for withholding supplemental wages as laid out by the IRS. And managing the taxation of supplemental pay can be a complex challenge fraught with errors and quite costly to correct. One wrong step by payroll and the company could face severe penalties for everything from failure to withhold the correct tax (bad enough!) to actual wage theft (rare but can happen). This webinar covers the basics for payroll professionals on how to properly tax any supplemental payment including bonuses, severance pay, and fringe benefits.
Learning Objectives:-
Understand and be able to distinguish between supplemental wage payments and regular wage payments
Determine the proper withholding using each of the methods specified by the IRS for supplemental wages.
Identify and apply the rules to common and not-so-common examples of supplemental pay.
Determine when to use each of the different supplemental rates correctly
Understand the effect Form W-4 and the payroll period have on supplemental pay withholding
Areas Covered in the Webinar:-
Definitions and examples of supplemental pay
Detailed calculations on calculating the proper supplemental tax to withhold
What options are available, when may they are elected, and who decides
Record-keeping requirements for compliance with mandatory flat rate withholding rules
Session Highlights:-
Introduction
Our Focus For Today
Bit of History
Regular Wages - Definition
Supplemental Wages - Definition
Exceptions and Options
2007 Change Year
Two Acceptable Methods
Two Acceptable Methods (cont’d)
Supplemental Rates 2020
Mandatory Flat Rate Method
Mandatory Flat Rate Method - Example 1 Split Payment
Mandatory Flat Rate Method - Example 1 Split Payment (cont’d)
Mandatory Flat Rate Method - Example 2 Employer Election
Mandatory Flat Rate Method - De Minimis Payment By Agent
Mandatory Flat Rate Method - De Minimis Payment By Agent Example
Mandatory Flat Rate Method
Aggregate Method Review
Aggregate Method Review (cont’d)
Example 1 - Aggregate Same Time Payments
Example 2 - Aggregate Pay at Separate Times
Example 3 - Aggregate Pay at Separate Times
Example 4 - Alternate Pay
Reminder: Have Not Withheld Taxes
Vacation Pay
Nonresident Aliens
Fringe Benefits
State Taxation
California State Tax, Unemployment, and Payroll Tax
Human Resources Executives/Managers/Administrators
Accounting Personnel
Business Owners/Executive Officers/Operations and Departmental Managers
Lawmakers
Attorneys/Legal Professionals
Any individual or entity that must deal with the complexities and requirements of Payroll compliance issues
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