M. Supplemental wage payments

Supplemental wages are compensation paid to an employee that are not regular wages. They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and nondeductible moving expenses. Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Also see federal Publication 15, Circular E , for a list of other payments that may be considered supplemental wages.

How you withhold on supplemental payments depends on whether the supplemental payment is identified as a separate payment from regular wages.