We’re coming to that time of year when you need to know about paying year-end bonuses. With Nextep, we’ve got you covered. Here are the details:
Timeline for bonuses
All requests for 2022 bonuses should be made by Friday, December 23. Requests made after December 23 must be paid in the 2023 tax year.
- Requests for bonuses should be made at least three business days before the payroll date to allow time for an accurate review.
- Please allow two additional days for special calculations, such as grossing up.
What else you need to know
Year-end bonuses can be submitted either as flat sums to supplement a regularly scheduled payroll or may be processed separately. This results in either an aggregate calculation for federal taxes or an optional IRS-set flat tax rate of 22%.
Bonuses will be paid by the regular paycheck delivery method of direct deposit or paper check. Please let us know of any changes when submitting your information.
Paper checks may be delayed as FedEx is experiencing longer shipping times. Requests for bonuses paid by paper check should be made at least 5 business days before the payroll date to be delivered on time.
Bonuses are subject to 401(k) deductions, and company matching will occur as usual, but health benefit deductions will not.
Nextep’s clients should contact their payroll specialists to process year-end bonuses.