Special Withholding Tax Status

Specify the special withholding tax status for each employee in the Special Withholding Tax Status field on the Federal Tax Data (TAX_DATA1), State Tax Data (TAX_DATA3), or Local Tax Data (TAX_DATA5) pages, referred to in the table below as the employee tax data page.

This table shows how Payroll for North America withholds tax based on the value selected in the Special Withholding Tax Status field for the Annualized Taxation method and the Supplemental Taxation method:

Note: When an employee receives more than $1 million of supplemental wages, the 37% federal tax is calculated and withheld regardless of the employee's Form W-4 elections.

As of January 1, 2022, the federal supplemental tax rate is 37%, and it is subject to change in future years. The rate is stored on the Federal Tax table.

Special Withholding Tax Status	Annualized Tax Method	Supplemental Tax Method
None	Withholding tax is calculated based on the employee's tax status and number of allowances. The system also withholds any additional withholding amount or percentage specified for the employee on the employee tax data page. On the paysheet, you can: Suppress additional tax withholding. Enter a one-time tax override to withhold a specific tax amount.	Withholding tax is calculated based on the supplemental tax method specified on the Tax Table - General page (STATE_TAX_TABLE1) for the tax jurisdiction being processed. The system ignores any additional withholding amount or percentage specified for the employee on the employee tax data page To withhold a specific tax amount, enter a one-time tax override on the paysheet.
No Taxable Gross; No Tax Taken	No tax is withheld, and no dollars are accumulated to taxable gross balances. The system ignores any additional withholding amount or percentage specified for the employee on the employee tax data page.	No tax is withheld, and no dollars are accumulated to taxable gross balances. The system ignores any additional withholding amount or percentage specified for the employee on the employee tax data page.
Maintain Taxable Gross	The system withholds only the additional withholding amount or percentage specified for the employee on the employee tax data page. On the paysheet, you can: Suppress the additional tax withholding amount or percent. Enter a one-time tax override to withhold a different specific tax amount. Note: On the Federal Tax Data page, an additional amount or percentage should not be entered when the Special Withholding Tax Status is Maintain taxable gross.	The system does not withhold any tax based on the supplemental tax method specified on the Tax Table - General page (STATE_TAX_TABLE1) for the tax jurisdiction being processed. The system ignores any additional withholding amount specified for the employee on the employee tax data page. The system withholds any additional withholding percentage specified for the employee on the employee tax data page. To withhold a specific tax amount, enter a one-time tax override on the paysheet.
Nonresident Alien	For nonresident alien (NRA) employees in commercial organizations (not E&G), the system calculates the withholding tax based on the taxable gross plus the additional amount required by the IRS to be added to the taxable gross for nonresident alien employees. This additional amount is stored on the Special Tax Amts page on the State Tax Table entry for State = $U (U.S. Federal). (E&G) For nonresident alien employees in education and government organizations, the system determines the taxable gross for FWT based on earnings that exceed the treaty maximum amount defined on the Tax Treaty table. The system calculates FWT based on the taxable gross plus the additional amount required by the IRS to be added to the taxable gross for nonresident alien employees. This additional amount is stored on the Special Tax Amts page on the State Tax Table entry for State = $U (U.S. Federal). The system also withholds any additional withholding amount or percentage specified for the employee on the employee tax data page. On the paysheet, you can: Suppress additional tax withholding. Enter a one-time tax override to withhold a specific tax amount.	Withholding tax is calculated based on the supplemental tax method specified on the Tax Table - General page (STATE_TAX_TABLE1) for the tax jurisdiction being processed. The system ignores any additional withholding amount or percentage specified for the employee on the employee tax data page. To withhold a specific tax amount, enter a one-time tax override on the paysheet.

Special Withholding Tax Status

Annualized Tax Method

Supplemental Tax Method

None

Withholding tax is calculated based on the employee's tax status and number of allowances.

The system also withholds any additional withholding amount or percentage specified for the employee on the employee tax data page.

On the paysheet, you can:

Suppress additional tax withholding.
Enter a one-time tax override to withhold a specific tax amount.

Withholding tax is calculated based on the supplemental tax method specified on the Tax Table - General page (STATE_TAX_TABLE1) for the tax jurisdiction being processed.

The system ignores any additional withholding amount or percentage specified for the employee on the employee tax data page

To withhold a specific tax amount, enter a one-time tax override on the paysheet.

No Taxable Gross; No Tax Taken

No tax is withheld, and no dollars are accumulated to taxable gross balances.

The system ignores any additional withholding amount or percentage specified for the employee on the employee tax data page.

No tax is withheld, and no dollars are accumulated to taxable gross balances.

The system ignores any additional withholding amount or percentage specified for the employee on the employee tax data page.

Maintain Taxable Gross

The system withholds only the additional withholding amount or percentage specified for the employee on the employee tax data page.

On the paysheet, you can:

Suppress the additional tax withholding amount or percent.
Enter a one-time tax override to withhold a different specific tax amount.

Note: On the Federal Tax Data page, an additional amount or percentage should not be entered when the Special Withholding Tax Status is Maintain taxable gross.

The system does not withhold any tax based on the supplemental tax method specified on the Tax Table - General page (STATE_TAX_TABLE1) for the tax jurisdiction being processed.

The system ignores any additional withholding amount specified for the employee on the employee tax data page.

The system withholds any additional withholding percentage specified for the employee on the employee tax data page.

To withhold a specific tax amount, enter a one-time tax override on the paysheet.

Nonresident Alien

For nonresident alien (NRA) employees in commercial organizations (not E&G), the system calculates the withholding tax based on the taxable gross plus the additional amount required by the IRS to be added to the taxable gross for nonresident alien employees. This additional amount is stored on the Special Tax Amts page on the State Tax Table entry for State = $U (U.S. Federal).

(E&G) For nonresident alien employees in education and government organizations, the system determines the taxable gross for FWT based on earnings that exceed the treaty maximum amount defined on the Tax Treaty table. The system calculates FWT based on the taxable gross plus the additional amount required by the IRS to be added to the taxable gross for nonresident alien employees. This additional amount is stored on the Special Tax Amts page on the State Tax Table entry for State = $U (U.S. Federal).

The system also withholds any additional withholding amount or percentage specified for the employee on the employee tax data page.

On the paysheet, you can:

Suppress additional tax withholding.
Enter a one-time tax override to withhold a specific tax amount.

Withholding tax is calculated based on the supplemental tax method specified on the Tax Table - General page (STATE_TAX_TABLE1) for the tax jurisdiction being processed.

The system ignores any additional withholding amount or percentage specified for the employee on the employee tax data page.

To withhold a specific tax amount, enter a one-time tax override on the paysheet.