With tax season underway, USPS wants employees to know that supplemental wages are taxed differently from normal wages.
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 exchanges
- Awards
- Back-pay awards
- Prizes
- Severance pay
- Reimbursements for nondeductible moving expenses
Currently, supplemental wages are subject to a withholding rate of 22 percent.
There’s also a mandatory withholding rate of 37 percent — or the highest rate of income tax for the year — for any supplemental wages paid in excess of $1 million within a calendar year.
Congress and the IRS determine taxation percentages.
The Postal Bulletin’s Jan. 16 edition has more information.