Are you thinking of giving your team a holiday bonus or a thank-you gift? Don’t let a good gesture turn into a costly IRS problem. Learn how to handle bonuses the right way.
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Key Notes
- Bonuses are supplemental wages and must be taxed properly.
- Skipping payroll can lead to IRS penalties, fines, and liability for unpaid taxes.
- Employers should:
- Document the bonus clearly.
- Run it through payroll software/provider.
- Keep accurate payroll records.
- If mistakes happen, payroll providers or accountants can help correct them.
