On the Sixth Week of Year-End, Payroll Gave to Me…
- Christine Stolpe CPP
- 4 days ago
- 3 min read
A gross-up, a spreadsheet,
and some grace under pressure!
Welcome to Bonus Season!
That magical time when “holiday cheer” collides with “federal tax withholding.”
This week’s about keeping your cool while everyone around you suddenly discovers they have opinions about bonuses, deadlines, and “how much tax is too much tax.”
You’ve entered the Bonus Season Survival Guide.
What Bonus Season Really Means
For most employees, bonuses mean excitement.
For payroll, it means two things:
timing and taxation.
Bonuses come in many forms — holiday, performance, retention, referral — but they all have one thing in common: they’re considered supplemental wages by the IRS.
That means special rules apply, and they’re not just about percentages — they’re about precision.
Because nothing kills holiday spirit faster than a mistimed deposit or a misunderstood gross-up.
Understanding Supplemental Taxation
Let’s simplify what the IRS calls “supplemental pay”:
Flat-rate method: Apply the supplemental tax rate (22% for federal in 2025).
Aggregate method: Combine bonus and regular wages, tax them as one.
Social Security, Medicare, and state/local taxes still apply.
You can’t escape FICA, not even for Christmas. 🎅
Bonus timing matters, too:
Same check as regular pay?
You may trigger the aggregate method.
Separate check?
Flat-rate rules apply.
When in doubt, check your setup before Finance hits “send.”
Grossing Up: Giving Grace Without Guesswork
“Gross it up!” sounds fun until someone’s spreadsheet doesn’t formula correctly.
Gross-ups are a gift — literally. They let employees receive a full intended amount after taxes.
But they’re also easy to mess up if you don’t verify:
Tax rates (federal, state, local)
Taxability of the bonus itself
Benefit deductions that might apply
Pro tip:
Always communicate whether the gross-up covers only federal withholding or all taxes.
Because when someone’s net check doesn’t match their expectation, guess who gets the first call?
(Hint: it’s not Finance.)
This Week’s Payroll Prep Checklist
Names, amounts, and employment status. Check it twice, Payroll Claus-style.
Confirm tax method.
Flat-rate or aggregate — no “we’ll figure it out later” allowed.
Run test calculations.
Spot potential rounding or rate errors before go-live.
Check funding and bank limits.
Don’t assume Finance preloaded enough for gross-ups and taxes.
Communicate expectations.
Let employees know what to expect — timing, taxes, and net amounts.
Document everything.
Keep copies of approvals, calculations, and communications for audit season.
Payroll Philosophy of the Week
Bonus season isn’t about perfection — it’s about grace.
You’re balancing the art of generosity with the science of taxation.
Payroll doesn’t just make bonuses happen; we make them make sense.
Because every “thank you” check is also a trust exercise — and that trust is built on your accuracy.
So when you process this year’s bonuses, remember:
You’re not just paying people; you’re helping them feel valued — and fairly taxed.
Bonus season is equal parts joy and judgment calls.
Stay clear on your methods, triple-check your math, and over-communicate — because transparency is the true gift.
When done right, bonuses don’t just make employees happy — they remind leadership why payroll is priceless.
You’ve made it halfway through the Twelve Weeks of Year-End — still standing, still smiling, still caffeinated. Every reconciliation, every calculation, every bonus file is proof that payroll doesn’t just survive December… we define it.
Week 7 Sneak Peek: “Leave, FMLA, and Your Paycheck”
Next week, we step into the world of time off, leave management, and holiday closures.
Because nothing says “December” like explaining why FMLA pay doesn’t qualify as PTO.
Take a breath, pour another cup, and let that spreadsheet know who’s boss.
You’ve earned this calm before the next storm.
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