A single one-time payment made to an employee outside the regular payroll cycle.
A lump sum payment is a single, one-time payment made to an employee — as opposed to regular installments. Common examples include sign-on bonuses, retention bonuses, relocation allowances, severance payments, gratuity payments, and some commission arrangements. Lump sum payments may receive different tax treatment depending on their nature and the applicable jurisdiction. Payroll software processes lump sum payments as supplemental payroll runs, applying correct tax withholding and generating documentation.
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