Tax benefit for employer at employees' expense?

Question

The international corporation I work for used to pay out our profit sharing bonuses as a separate check. Now, we receive these bonuses in our paycheck. (Itemized as such.)

We feel penalized, since we are taxed more for one large check instead of two smaller ones.

I've decided this change must financially benefit the corporation in some way.

My question is: How?

Answer 1

It's less expensive and more time effective to cut only one check rather than two,.  Simple math.

Answer 2

It doesn't benefit the corporation except for saving the cost of putting out an extra set of checks.  And it's only your withholding that changes - that will be reconciled when you do your tax return.  In the end you'll pay the same tax either way.

Answer 3

Those types of bonuses are called "supplemental wages".  If they give it to you as a separate check, and don't bring your other pay into the equation, they are required to withhold at a flat 25% rate.  Most people would end up with less withheld if the supplemental pay is added to the regular pay and the withholding calculated on the total (and yes, contrary to what someone will probably say here, they are allowed to do so).

See the discussion on the ways that withholding can be calculated on supplemental pay in IRS Pub 15:

http://www.irs.gov/publications/p15/ar02...

Either way, when all the dust settles and you file your tax return, your taxes are the same.  

Your employer is not gaining some huge benefit by doing this.  Just less paperwork and payroll entries to deal with.

Answer 4

By writing fewer checks.

You're taxed the same regardless if you're paid with one check for $100 or 100 checks for $1

Answer 5

It would appear that the corp. is only coming in line with appropriate pay-role procedures.  There is little or no benefit to them.