Are there any advantages to an employer paying an employee primarily through supplemental wages?

Question

Is there any advantage paying an employee through supplemental wages instead of regular (salary) wages? Does the employer get any kind of tax break? Or do they pay less tax overall if the majority of the compensation is paid via supplemental wages?

Answer 1

It would help if you define what you mean by 'supplemental wages'. It sounds to me as though that's a term used outside the US

Answer 2

Supplimental wages as defined in Treas. Reg 31.3402(g)-1 are subject to special withholding rules.

I would not play game with wage withholding. There really isnt that much of a benefit to trying to eek out a few bucks of lower withholding just to pay it with the filing of the return a few months later.

But thats just my 2 cents.

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