EPY: Federal Tax Not Calculated at the Flat Supplemental Rate on the First Supplemental Payment of the Current Year (Doc ID 2371706.1)

Last updated on APRIL 15, 2024

Applies to:

Symptoms

Federal withholding tax is incorrectly calculated and withheld when an employee is paid supplemental wages separately from normal wages and tax was withheld on previous on-cycle payment. Based on the federal tax table entry the flat supplement rate should be used, but aggregate appears to be used instead.

Aggregate − No Tax else Percent

When supplemental wages are paid separately from normal wages, withholding depends on whether tax was withheld on the employee's current payment of normal wages, if any, or on previous on-cycle payments (in the same pay group).

If no tax was withheld on either condition, calculate tax on supplemental wages using the Aggregate Method.
If tax was withheld on either condition, calculate tax using a flat percent rate as specified on the Federal tax table, without regard for marital status or allowances.

Changes

Cause

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