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600 E. Boulevard Ave.
  Bismarck, ND 58505-0599
  701.328.7088 phone
  701.328.3700 fax
  877.328.7088 toll-free

Supplemental Wages

    (Revised June 2013)

    Wages that are treated as supplemental wages for federal income tax withholding purposes, as described in the IRS's Publication 15 (Circular E), Employer's Tax Guide, are treated as supplemental wages for North Dakota income tax withholding purposes. They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, and taxable fringe benefits. Calculating the amount of North Dakota income tax to withhold from supplemental wages is similar to the method used for federal income tax withholding purposes, which depends on whether the supplemental wages are separately paid or separately identified from regular wages.

    Supplemental wages are not separately paid or separately identified from regular wages. If you include supplemental wages with regular wages in a single payment but do not separately identify each amount, calculate the amount to withhold from the payment in the usual manner using one of the two regular withholding methods.

    Supplementary wages are separately paid or separately identified from regular wages. If you pay supplemental wages separately from a regular wage payment, or you combine the supplemental wages and regular wages into one payment and separately identify each amount, calculate the amount of North Dakota income tax to withhold from the supplemental wages under one of the following options:

    • Option 1 - Multiply the supplemental wages by 2.28% (.0228).
    • Option 2 Calculate the amount to withhold from the supplemental wages in the following steps:
      1. If supplemental wages are to be paid at the same time as a regular wage payment, add the supplemental wages to the regular wages. Or, if supplemental wages are to be paid separately from a regular wage payment, add the supplemental wages to the amount of regular wages paid (or to be paid) for the most recent payroll period.
      2. Calculate the withholding amount on the combined amount of supplemental and regular wages (from Step 1) in the usual manner using one of the two regular withholding methods.
      3. Subtract the amount of income tax withheld (or to be withheld) from the regular wage payment from the withholding amount calculated on the combined amount (in Step 2).
    • Example 1. You have an employee who is single and claims one withholding allowance. The regular salary, paid on the 1st day of each month, is $3,000. Under Method Two: Withholding Tables, you withhold $29 from the July 1 paycheck. On July 15, you pay a bonus of $1,000 to the employee. If you choose Option 1, the amount to withhold from the bonus payment is $22.80 ($1,000 x 2.28%).

      Example 2. Assume the same facts in Example 1 except that you choose to use Option 2 to calculate the withholding from the bonus payment. Add the $1,000 bonus payment to the regular monthly salary of $3,000, for a combined amount of $4,000. Under Method Two: Withholding Tables, the withholding amount on the combined amount is $47. From this amount, subtract $29 (the withholding amount on the $3,000 monthly salary). The amount to withhold from the bonus payment is $18 ($47 -$29).

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