IRS Publication 505 should be seen for more information. These rules do not apply to children under age 21, parents, and spouses. Circular A and Circular E should be referred to for details concerning who must pay FUTA, what forms are required, and when deposits must be made. Supplemental Compensation Supplemental wages are compensation paid to an employee in addition to the employee's regular wages. They include, but are not limited to, bonuses, commissions, overtime pay, severance pay, awards, backpay, and payments for non-deductible moving expenses.
Tips are generally subject to withholding but with specific rules.
See Circular E for more information regarding tips. If supplemental wages are paid with regular wages but the amounts of each are not specified, income tax withholdings should be figured as if the total were a single payment for a regular payroll period. If supplemental wages are paid separately or with regular wages and the amounts of each specified, the income tax withholding method depends partly on whether or not income taxes are withheld from the employee's regular wages. If income taxes are not withheld from the employee's regular wages, add the supplemental and regular wages and figure the income tax withholding as if the total were a single payment. Refer to Circulars A and E for more details.