earns $275 in commissions, which together with the salary of $100 is paid on February 10, 1965. Under the wage bracket method the amount of the tax required to be withheld is shown in the table applicable to a monthly payroll period. Under this table it will be found that the amount of tax required to be withheld is $44.30.

Example (2). B is employed at a salary of $3,000 per annum paid semimonthly on the 15th day and the last day of each month, plus a bonus and commission determined at the end of each 3-month period. The number of withholding exemptions claimed is four. The bonus and commission for the 3month period ending on March 31, 1965, amount to $250, which is paid on April 10, 1965. Under the wage bracket method, the amount of tax required to be withheld on the aggregate of the bonus of $250 and the last preceding semimonthly wage payment of $125, or $375 is $36.20. Since tax in the amount of $2.10 was withheld on the semimonthly wage payment of $125, the amount to be withheld on April 10, 1965, is $34.10. If, however, supplemental wages are paid and tax has been withheld from the employee's regular wages, the employer may determine the tax to be withheld from supplemental wages by using the applicable rate under section 3402 (a) without allowance for exemption and without reference to any regular payment of wages.

(b) Special rule where aggregate withholding exemption exceeds wages paid. (1) If supplemental wages are paid to an employee during a calendar year for a period which involves two or more consecutive payroll periods, for which other wages also are paid during such calendar year, and the aggregate of such other wages is less than the aggregate of the amounts determined under the table provided in section 3402 (b) (1) as the withholding exemptions applicable for such payroll periods, the amount of the tax required to be withheld on the supplemental wages shall be computed as follows:

Step 1. Determine an average wage for each of such payroll periods by dividing the sum of the supplemental wages and the wages paid for such payroll periods by the number of such payroll periods.

Step 2. Determine a tax for each payroll period as if the amount of the average wage constituted the wages paid for such payroll period.

Step 3. From the sum of the amounts of tax determined in Step 2 subtract the total amount of tax withheld, or to be withheld, from the wages, other than the supplemental wages, for such payroll periods. The remainder, if any, shall constitute the amount of the tax to be withheld upon the supplemental wages.

Example. An employee has a weekly payroll period ending on Saturday of each week, the wages for which are paid on Friday of the succeeding week. On the 10th day of each month he is paid a bonus based upon production during the payroll periods for which wages were paid in the preceding month. The employee is paid a weekly wage of $64 on each of the five Fridays occurring in April 1965. On May 10, 1965, the employee is paid a bonus of $125 based upon production during the five payroll periods covered by the wages paid in April. On the date of payment of the bonus the employee, who is married and has three children, has a withholding exemption certificate in effect claiming five withholding exemptions. The amount of the tax to be withheid from the bonus paid on May 10, 1965, is computed as follows:

Wages paid in April 1965 for 5 payroll periods (5 × $64).

Bonus paid May 10, 1965....

$320.00

125.00