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The agency must–
Pay the employer's share of social security and Medicare taxes on the loan repayment;
Withhold and pay...
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To use this method the agency follows these steps:
The Federal agency calculates the correct amount of employment tax
withholding on all wages paid...
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The correct amount of income tax withholding is calculated
by taking a flat 25 percent of the supplemental wages. Social security
tax and Medicare tax withholding are calculated at the usual rates...
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One of two methods may be used – (1) the regular method or
(2) the flat rate method. These methods apply because the loan
repayments are supplemental wages paid in addition to...
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The flat rate method of withholding on supplemental wages
may be used if income taxes have been withheld from the regular wages of
the employee. Consequently, if income taxes have been withheld...