The Postal Service is reminding employees that the percentages used to tax supplemental wages differ from normal taxation percentages.
Supplemental wages can include:
- Annual leave exchange
- Back-pay awards
- Severance pay
- Reimbursements for nondeductible moving expenses
Supplemental wages are subject to a withholding rate of 22 percent. Congress and the IRS determine taxation percentages.
The Postal Bulletin’s Feb. 1 edition has more information.