Architects & Engineers Articles - Supplemental Wage Withholding RateEffective January 1, 2005, employers making "large" payments must use a supplemental withholding rate of 35%. In determining whether or not the 35% rate applies, an employer must aggregate all wage payments to the individual for the year, and an entity aggregation rule will apply to certain employer groups. If the aggregate payments exceed $1,000,000, the 35% rate must be used on the excess. For payments which do not exceed the $1,000,000 amount, the supplemental wage withholding rate remains fixed at 25%. Supplemental wages can include items such as bonuses and commissions, but may also include option income and other forms of ordinary income arising from equity compensation or nonqualified deferred compensation. Find out how our expertise in accounting for architects and engineers can add value to your business. Email us or call us at 1 (888) 875-9770. related linksPODCAST: Overhead Rates, State Agency Updates and Best Practices for Engineers |
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