November 25, 2013 - BenefitMall

Preparing Payroll for Year-End: Managing Bonus Payments Each year, employers across the country realize that they need to adjust their payroll data after their final payroll run of the year. In a special three-part blog series, we explore the three most common adjustments that can be avoided with just a little planning. In the second issue of this series, we review employee bonuses. An employee bonus is defined as compensation in addition to wages and is generally given as a reward for performance. With a few exceptions, both cash and non-cash bonuses are considered supplemental wages by the IRS and are subject to income tax withholding and other payroll taxes.

planning. implications for the employee on a local, state and federal level before running the bonus payroll. The percentage method calculates federal withholding at a flat 25 percent rate to bonuses paid in amounts up to one million

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