Tax Rate on Annual Bonus

Ed C

I am about to pay end-of-the-year bonuses to my employees. The amounts are not "insignificant" so I know they must be taxed. The question is, do I have to tax at a certain rate of can the rate default to the employee's current tax rate based on his/her claimed exemptions?

dixied

I suggest you look at the IRS website, Publication 15, Circular E (Employers Tax Guide)
There, it provides information on how to tax supplemental wages, page 13. You have 3 options.