Bonus checks are considered to be supplemental wages, and according to IRS regulations
, you cannot adjust taxes
at will on your withholding for this particular check.
Employers are required to use one of 2 methods to tax this check, assuming the check is less than $1 million.
1. Withhold a flat 25% (no other percentage allowed).
2. Add the supplemental and regular wages for the most recent payroll period this year. Then figure the income
tax withholding as if the total was a single payment. Subtract the tax already withheld from the regular wages. Withhold the remaining tax from the supplemental wages. If there were other payments of supplemental wages (after the last payment of regular wages but before the current payment of supplemental wages), aggregate all the payments, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wages, and withhold the remaining tax.
Because of the complexity
of the second method, most employers choose just to tax bonus payments at the required flat rate
of 25%. Please refer to the following IRS Publication 15 - Section on Supplemental Wages.http://www.irs.gov/publications/p15/ar02.html#d0e1643
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