If i changed my withholding to 10 from 4, would it change the amt. taxed on an Earned Time Off payout?

Question

If i changed my withholding to 10 from 4, would it change the amt. taxed on an Earned Time Off payout?

Answer 1

Assuming that the earned time off is taxed like regular pay, then there would be less tax withheld as long as the new W-4 was filed early enough.

However, if you are expecting a payment for the earned time off that is greater than your regular paycheck, then it will probably be taxed at 25%.  Any excess withholding will be refunded when you file your tax return.

Answer 2

Probably not.

Irregular payments tend to use a flat 25% to avoid underwithholding on people who play games with their W-4.