Apparently "Taxable No Withholding" does NOT mean Taxable NO Withholding. If a tax is set as Taxable No Withholding on specific earnings, and a check is cut just for those specific earnings, it will STILL withhold any additional amounts on the employee's tax record. The IRS Publication 15 specifically states that any additional withholding specified by the employee is in addition to regular withholding calculations. If you've specified NO withholding, and you are not even running the calculations, why would it withhold additional amounts? Employees that are getting small incentives are now negative or not getting anything because their additional amounts specified for a regular paycheck and based on their normal salary are trying to come out when it clearly states NO WITHHOLDING.