Question: What are the tax guidelines for executive bonuses payments? I need to calculate the withholding on them manually.
Answer: Bonuses are supplemental pay. So you can use the flat 25% income tax withholding rate for bonuses that don’t exceed $1 million. For bonuses and other supplemental pay that exceed $1 million, you must use the flat 39.6% rate, and disregard the executive’s W-4 form. The normal FICA rates apply, up to the $113,700 Social Security wage base. After that, withhold 1.45% in Medicare taxes. If the executive’s pay exceeds $200,000, withhold Medicare taxes at 2.35%.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/35590/how-should-we-calculate-withholding-on-executive-bonuses "