Supplemental Pay Essentials: Special Withholding Rules for Bonuses, Severance Pay, Commissions and Fringe Benefits

Duration: 90 minutes

Speaker: Patrick A. Haggerty, EA

CREDITS:

Available On-Demand

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ABOUT THE EVENT

Supplemental pay includes compensation such as overtime premiums, bonuses, severance pay and fringe benefits. It is an important component of employee compensation but has its own set of withholding rules. This training program will help attendees distinguish between supplemental wage payments and regular wage payments and help them identify wage payments that are neither supplemental nor regular. It will detail methods used to compute withholding on supplemental pay and discuss the application of the rules and methods to specific payments and situations.

This fast paced and detailed webinar will provide crucial information to effectively manage supplemental wage payments. It will discuss optional methods and when they may be used as well as the effect of Form W-4 claims and regular pay period on supplemental pay withholding.

Why should you attend this webinar?

Computing an appropriate amount of withholding for supplemental pay can be a challenge. Payroll departments often hear complaints of too much withholding from employees and sometimes too little withholding from highly compensated employees. The introduction of mandatory flat-rate withholding for certain employees changed the definitions of supplemental and regular wages and created additional record keeping responsibilities for employers. The rules for withholding from supplemental pay involve compliance issues for employers related to tracking supplemental wages paid to each employee during the calendar year, selecting the appropriate method to use to compute withholding from supplemental pay, and proper application of options and exceptions to the general rules. Failure to know and correctly apply the rules can result in costly penalties for failure to withhold the correct amount of tax.

Learning Objectives

Distinguish between supplemental wage payments and regular wage payments and identify wage payments that are neither supplemental nor regular.
Compute withholding using each of the methods specified for supplemental wages.
Apply critical options and exceptions to the general rules.
Identify and apply the rules to common and not so common examples of supplemental pay.
Apply the rules apply to severance pay, deferred compensation, and other post-termination payments.
Determine when the 22% flat rate may be used and when it is not allowed.
Determine when the 37% flat rate must be used and how to apply it to supplemental wage payments.
Avoid failure to withhold penalties.

Areas Covered in the Session

Why Congress distinguished supplemental pay and enacted special rules for computing withholding.
Definitions and examples of supplemental and regular compensation including optional treatment and exceptions.
A detailed description of methods used to compute withholding on supplemental pay including examples.
When optional methods may be elected and when they may not.
When the mandatory flat rate method must be used and situations in which the employer has options.
The effect of Form W-4 claims and regular pay period on supplemental pay withholding.
Record keeping required for compliance with mandatory flat-rate withholding rules.
Penalties for failure to withhold and penalty avoidance.
Application of the rules to specific examples of supplemental pay situations.

Who Will Benefit

Payroll Supervisors and Personnel
Payroll Consultants
Payroll Service Providers
Public Accountants
Internal Auditors
Tax Compliance Officers
Enrolled Agents
Employee Benefits Administrators
Officers and Managers with Payroll or Tax Compliance Oversight
Company / Business Owners
Managers/ Supervisors
Public Agency Managers
Audit and Compliance Personnel / Risk Managers.

Speaker(s)

Patrick A. Haggerty, EA

Pat Haggerty is a tax practitioner, author, and educator. His work experience includes non-profit organization management, banking, manufacturing accounting, and tax practice. He began teaching accounting at the college level in 1988. He is licensed as an Enrolled Agent by the U. S. Treasury to represent taxpayers at all administrative levels of the IRS and is a Certified Management Accountant. He has written numerous articles and a monthly question and answer column for payroll publications. In addition, he regularly develops and presents webinars and presentations on a variety of topics including Payroll tax issues, FLSA compliance, information returns, and accounting.

CEUs

The use of this seal confirms that this activity has met HR Certification Institute’s® (HRCI®) criteria for recertification credit pre-approval.

Credits: 1.5

Compliance Prime is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: https://www.nasbaregistry.org.

Credits: 1.0

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