17 NCAC 06C .0117         SUPPLEMENTAL WAGE PAYMENTS

(a)  If an employer pays supplemental wages separately (or combines them with regular wages in a single payment and specifies the amount of each), the income tax withholding method depends on whether the employer withholds income tax from the employee's regular wages and whether the wages and supplemental wages are paid in a single payment.

(b)  If tax has been withheld on the regular wages and the supplemental amount is not paid in a single payment together with regular wages, the employer may treat the supplemental wages as wholly separate from the regular wages and apply the income tax rate for that tax year pursuant to G.S. 105-153.7(a) plus one-tenth of one percent to the supplemental wage payment without consideration for allowances claimed on the employee's withholding allowance certificate.  Otherwise, the supplemental wages shall be added to the regular wages for the most recent payroll period.  The income tax shall be figured as if the regular wages and supplemental wages constitute a single payment.  The tax already withheld from the regular wages is subtracted from this amount.

(c)  The remaining tax determined under Paragraph (b) shall be withheld from the supplemental wages. If the employer did not withhold income tax from the employee's regular wages, the employer shall add the supplemental wages to the employee's regular wages paid for the current or last preceding payroll period and withhold tax as though the supplemental wages and regular wages were one payment.

(d)  Tips shall be treated as supplemental wages.  The employer shall withhold the income tax on tips from wages or collect the tax from funds the employee provides.  If an employee receives regular wages and reports tips, the employer shall figure income tax as if the tips were supplemental wages.  If the employer has not withheld income tax from the regular wages, the employer shall add the tips to the regular wages and withhold income tax on the total.  If the employer withheld income tax from the regular wages, the employer shall withhold on the tips as explained in Paragraphs (b) and (c).

History Note:        Authority G.S. 105-153.7; 105‑163.1(13); 105‑163.2; 105‑262;

Eff. February 1, 1976;

Amended Eff. June 1, 1990;

Readopted Eff. May 1, 2016;

Amended Eff. August 1, 2016.