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Mark D
Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 1304
Experience:  MBA, EA, Specializing in Business and Individual Tax Returns and Issues
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We use a payroll service. Can bonuses be added to standard

Resolved Question:

We use a payroll service. Can bonuses be added to standard salary in a pay period, versus paid separately under the "bonus" column?
Submitted: 7 years ago.
Category: Tax
Expert:  Mark D replied 7 years ago.
Customer

 

Bonuses must be stated separately due to different withholding requirements on bonuses and regular pay. Please let me know if you have further questions.

 

Regards,

 

Mark D

Customer: replied 7 years ago.
Did you see my follow-up?
Expert:  Mark D replied 7 years ago.
Customer

 

This should be classified as a bonus and stated separately. The only difference will be the income tax withholding rate. The will be no employer tax difference.

 

Regards,

 

Mark D

Customer: replied 7 years ago.

To say this plainly, what my employer needs to know in order to do this correctly, is, is it against the law to do it any other way?

Expert:  Mark D replied 7 years ago.
Customer

 

My apologies as I misread and was thinking this was hourly reporting. Bonuses for salaried employees can either be simply combined with the regular earnings as one lump sum or reported separately. Bonuses stated separately should generally have a 25% income tax withholding rate. If only one lump figure is used, withhold federal income tax as if the total were a single payment for a regular payroll period. Sorry for the confusion and please let me know if this did not answer your question.

 

Regards,

 

Mark D

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