Supplemental wages are part of additional earnings paid to salaried/hourly employees and are not determined by the amount of time worked in a period. All additional earnings are subject to income tax withholding and employment taxes.  PayWow provides a list of predefined earnings that may be enabled if it is applicable, as per your company’s policy.

For 2020, the federal supplemental tax rate is 22%. If an employee receives supplemental wages greater than $1 million, the tax rate is 37%. For state tax withholding, the supplemental tax rate varies from state to state. 

Here’s how to enable a predefined Additional Earning in PayWow:

  • Go to Settings >> Payroll Settings >> Employee Additional Earnings.

  • Click Add Additional Earnings.

  • Enter Name of the Earning and select Earning Type and choose whether the earning will be considered for minimum wage adjustments.

  • Click Save.

  • Click to Disable Additional Earnings.

  • In Edit Additional Earnings page, select Disable.

  • Click Save.

When payroll is run, you will be able to enter values for earning types that are enabled as additional earnings. The Supplemental earning types will be listed under Other Earnings, while the rest of the additional earning types will be under Regular Earnings.

To learn how additional earnings can be adjusted toward the minimum wage, click here.