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How to run bonus payroll without tax withholding?

 
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Best answer October 15, 2018

Best Answers
john-pero
Community Champion

How to run bonus payroll without tax withholding?

If you want to give out a net amount you have to start with a higher gross and fiddle with the amount to factor taxes. Bonus pay is subject to FWT, SS, Medicare, FUTA, SUTA, state and local income.

You can cut a check without taking out taxes but you would still have to submit their portion of taxes as well as yours.

And the IRS requires a flat 25% withholding on bonus pay, which few employers probably comply with, instead allowing recalculate on of tax as if the pay with bonus were to be the annualized rate- meaning possibly more tax is withheld than required by law in some cases, and less in others.

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1 Comment
john-pero
Community Champion

How to run bonus payroll without tax withholding?

If you want to give out a net amount you have to start with a higher gross and fiddle with the amount to factor taxes. Bonus pay is subject to FWT, SS, Medicare, FUTA, SUTA, state and local income.

You can cut a check without taking out taxes but you would still have to submit their portion of taxes as well as yours.

And the IRS requires a flat 25% withholding on bonus pay, which few employers probably comply with, instead allowing recalculate on of tax as if the pay with bonus were to be the annualized rate- meaning possibly more tax is withheld than required by law in some cases, and less in others.

View solution in original post

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