Travel Nurses' Frequently Asked Questions on Supplemental Wage Payment

What payments are considered supplemental wage payments?

Supplemental wage payments include bonuses (such as completion, extension, or referral bonuses), lump sum vacation pay, taxable transportation reimbursements, taxable housing costs or allowances, taxable meal per diems, and other forms of taxable reimbursements other than regular wages.

How and when will these supplemental wage payments be paid to the travel nurse?

Supplemental wage payments will generally be paid on the next pay cycle after all of the documentation authorizing and approving the payment has been received by the Payroll Department. The amount will be combined with the next week's regular pay unless the travel nurse had no regular earnings for that week; then a separate check or direct deposit will be made.

What Federal payroll taxes will be withheld from the supplemental wage payments?

Federal FICA tax (Social Security and Medicare) will be withheld at the required 7.65% rate on all taxable supplemental wages. Federal income tax will be withheld at the IRS required flat 25% supplemental pay tax rate for bonuses, lump sum vacation pay, and other pay that is not routine (weekly/monthly) in nature. Taxable housing costs and allowances, meal per diems, and other weekly taxable supplemental payments will be added to the current week's regular pay to determine the Federal income tax withholding according to the standard IRS withholding tables. The tax determined under the withholding tables will depend on the travel nurse's W-4 status and the magnitude of the base pay and supplemental pay. The Federal income tax withholding could range from 10% to 35%.

To what state will supplemental wage payments be reported and what state income tax be withheld?

If the supplemental wage payment is associated with an assignment in a single state, it will be reported as income earned in that assignment state and that state's tax (if any) will be withheld. Additional state tax may be withheld for the travel nurse's tax home state depending on the tax rules and tax rates of the tax home state as compared to the assignment state's tax rates. If the supplemental wage payment does not apply to any one assignment or more than one assignment, then it will be sourced to the travel nurse's tax home state and only that state's tax rates will apply, if any.

Will supplemental wage payments be subject to 401k contribution withholding?

The completion bonus, extension bonus, lump sum vacation pay, and any other type of bonus amount will be subject to 401k contributions withholding if the travel nurse is participating in the 401k Plan. Taxable housing allowances and costs, and taxable travel reimbursements will not be subject to 401k contribution withholding.

Tax information contained in these documents is not intended to be used, and cannot be used, by any person as a basis for avoiding tax penalties that may be imposed by the IRS or any state. We recommend each taxpayer seek advice based on their circumstances from an independent tax advisor.