When you pay supplemental wages at the same time as regular wages, the method of calculating the withholding is the same for vacation payments as for semiannual bonuses.

Name: When you pay supplemental wages at the same time as regular wages, the method of calculating the withholding is the same for vacation payments as for semiannual bonuses.
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The IRS treats vacation pay as regular wages, while bonuses are considered supplemental wages, which may be subject to different withholding methods.

When You Pay Supplemental Wages at the Same Time as Regular