Which statement about the aggregate method for withholding supplemental wages is true?

• A. The aggregate method uses regular wages to determine withholding.
• B. The percentage method uses a flat rate to withhold.
• C. The aggregate method uses regular wages in calculation.
• D. The aggregate method uses a flat rate to withhold.

Answer: (A)

The aggregate method works by treating the supplemental pay as part of the employee’s regular wages for the current period. You add the supplemental amount to the regular wages, apply the normal withholding tables to the total, and then determine the withholding on the supplemental portion by subtracting the tax already withheld on the regular wages. In short, regular wages are used to determine withholding under the aggregate method, which is why that statement is correct. The flat-rate approach is not used here—that describes the percentage method, not the aggregate method.