Supplemental wages are wages paid outside an employee's regular or salary wages, such as bonuses, commissions, overtime, and other one-time payments.
Restaurant365 allows a payroll company to choose how supplemental wages are taxed by default, using the Default Supplemental Tax Method field on the Company Tax Profile page. This setting determines whether supplemental wages are taxed using a flat federal rate or based on the employee's current withholding elections.
Security
Users with the following permission will be able to access and edit the Company Tax Profile page:
Payroll
R365 Payroll
Company Tax Profile
View Company Tax Profile
Edit Company Tax Profile
Navigation
The supplemental wage tax configuration is done on the Company Tax Profile page.
Navigation Steps
Open the Payroll app.
Expand Taxes.
Click Company Tax Profile.
Search
Navigate to pages with the R365 global search bar:
Enter all or part of the page name in the R365 global search bar.
Select the page from the results list.
Only enabled pages can be searched for. If the desired page is not enabled, contact your CSM for assistance.
Flat Rate vs. Aggregated
Flat rate — 22% federal withholding applies the IRS standard flat rate of 22% to federal supplemental wages, and 37% to the portion of an employee's supplemental wages that exceed $1,000,000 in a calendar year. State supplemental wages are taxed using the employee's current effective rate. Flat rate is the default supplemental tax method.
Aggregated — use employee's current effective rate combines the supplemental payment with the employee's regular wages for the pay period to determine the withholding rate, based on the employee's current W-4 elections, for both federal and state taxes.
This setting is different from the Tax Method option available when creating an off-cycle pay run. Off-cycle pay runs use their own Tax Method selection (Supplemental or Employee Elections) and are not affected by the Default Supplemental Tax Method field.
Setting the Default Supplemental Tax Method
1) On the Company Tax Profile page, click the edit button next to Default Supplemental Tax Method.
3) Select the supplemental tax method.
Options include: Flat rate — 22% federal withholding or Aggregated — use employee's current effective rate.
4) Click Save.
The Save button will be enabled when a change is made.
The Default Supplemental Tax Method field applies to on-cycle pay runs only. Off-cycle pay runs are not affected by this setting.