Supplemental Pay Essentials - Severance Pay, Deferred Compensation, Recordkeeping and Fringe Benefits

Overtime premiums, bonuses, severance pay and fringe benefits are all supplemental pay, and they come with their own withholding rules. This 90-minute supplemental pay withholding training explains how to tell supplemental wages from regular wages and spot payments that are neither.

You'll learn why Congress created special rules, the methods for computing withholding with worked examples, when optional methods may and may not be used, and when the mandatory flat rate applies. The session also covers how Form W-4 claims and the regular pay period affect withholding, recordkeeping for flat rate rules, severance, deferred compensation and other post-termination payments, and how to avoid failure-to-withhold penalties.

• Distinguish supplemental from regular wage payments and identify payments that are neither
• Compute withholding using each method allowed for supplemental wages
• Apply key options and exceptions to the general rules
• Apply the rules to common and less common supplemental pay examples
• Handle severance pay, deferred compensation and other post-termination payments
• Know when the optional flat rate may be used and when the mandatory flat rate applies
• Avoid failure-to-withhold penalties

• Why Congress distinguished supplemental pay and set special withholding rules
• Definitions and examples of supplemental and regular compensation, including optional treatment and exceptions
• Methods for computing withholding on supplemental pay, with examples
• When optional methods may and may not be elected
• When the mandatory flat rate must be used and when the employer has options
• How Form W-4 claims and the regular pay period affect supplemental withholding
• Recordkeeping for mandatory flat rate withholding
• Penalties for failure to withhold and how to avoid them
• Applying the rules to specific supplemental pay situations

Employees often complain that too much tax was taken from a bonus, while highly paid staff may have too little withheld. Mandatory flat rate withholding changed the definitions of supplemental and regular wages and added recordkeeping duties, and getting it wrong can mean costly penalties.

This session suits payroll staff, consultants and service providers, public accountants, auditors, tax compliance officers, enrolled agents, benefits administrators, owners and managers with payroll or tax oversight.

• 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

Patrick 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.