MIP Ideas Portal

ability to compute bonus/special checks on different pay frequencies

Right now payroll taxes are computed only based on the pay-period frequency assigned to the employee.  Single payments, like bonuses or commissions should be able to be taxed at different frequencies/rates

  • Stuart McClain
  • Apr 18 2017
  • Will not implement
  • Attach files
  • Tom Donelan commented
    23 Aug, 2019 01:25am

    Why will this not me implemented?  Currently employees file W-4's with exaggerated dependents to try to reduce the tax impact of bonuses and other single payments that distort the income taxes.  Makes for a lot of effort changing all the dependents and then changing them back - when have a bonus earnings calculated at the IRS supplemental rate rate would solve this issue. 

  • Stuart McClain commented
    15 May, 2017 03:18pm

     a different earning code/rate is fine that is standard practice - it is the computation of the TAXES - Fed/State withholding that is my issue since normally bonuses etc. are taxed at a special rate.  if a $2,000 bonus is taxed at regular pay period rated, like biweekly - then that computes to $52,000 annual and will be taxed at that level - but the employee may not really earn that much and they end up being over taxed.

    There is a standard federal/state tax rate for bonuses - but sometimes there are other 'special' checks as well that would need a different rate.

    From the IRS

    The Percentage Method. The IRS specifies a flat “supplemental rate” of 25%, meaning that any supplemental wages (including bonuses) should be taxed in that amount. If you receive a $5,000 bonus, under this rule, $1,250 (25% of $5,000) goes straight to the IRS

  • Dan Murphy commented
    15 May, 2017 02:44pm

    Many of our customers that calculate bonuses are doing so with a different earning code/rate than the regular earning codes that are used.

    This is done for various reasons, including the inability to charge bonuses to many grants.

    Currently, this is the advised method of handling this, but if there is further issue support would be more than happy to help.

    Thank you for your feedback and best wishes!