Are company bonuese taxed extra?

[PAB]

Originally posted by: CPA

Originally posted by: msparish
How much tax is taken out is totally automated, based on how large the check is. For this check, (assuming you're paid twice a month), it looks like you are going to make about $24000 more than what you really will over the entire year. Hence, you probably got bumped into a higher tax bracket for this week.

Edit: You'll get the money back at tax time, or you could lower your witholdings for the next couple weeks to make up for it.

wrong, all bonuses are taxed at a Federal Rate of 25%. Then you then you have 7.65% for FICA. Bonuses are considered supplementary compensation and not normal wages. Your state may also have a pre-set rate that would make the effect even larger.

CPA wins the thread.

Where I used to work, if you got an unofficial bonus, they wrote it up as additional straight time.

 

[E equals MC2]

Originally posted by: PAB

Originally posted by: CPA

Originally posted by: msparish
How much tax is taken out is totally automated, based on how large the check is. For this check, (assuming you're paid twice a month), it looks like you are going to make about $24000 more than what you really will over the entire year. Hence, you probably got bumped into a higher tax bracket for this week.

Edit: You'll get the money back at tax time, or you could lower your witholdings for the next couple weeks to make up for it.

wrong, all bonuses are taxed at a Federal Rate of 25%. Then you then you have 7.65% for FICA. Bonuses are considered supplementary compensation and not normal wages. Your state may also have a pre-set rate that would make the effect even larger.

CPA wins the thread.

Where I used to work, if you got an unofficial bonus, they wrote it up as additional straight time.

Isn't that illegal?

My company sent me a $100 bill in the christmas card through mail. I was like WTF, ILLEGAL. But I didn't complain. 😉

 

[CPA]

Originally posted by: E equals MC2

Originally posted by: PAB

Originally posted by: CPA

Originally posted by: msparish
How much tax is taken out is totally automated, based on how large the check is. For this check, (assuming you're paid twice a month), it looks like you are going to make about $24000 more than what you really will over the entire year. Hence, you probably got bumped into a higher tax bracket for this week.

Edit: You'll get the money back at tax time, or you could lower your witholdings for the next couple weeks to make up for it.

wrong, all bonuses are taxed at a Federal Rate of 25%. Then you then you have 7.65% for FICA. Bonuses are considered supplementary compensation and not normal wages. Your state may also have a pre-set rate that would make the effect even larger.

CPA wins the thread.

Where I used to work, if you got an unofficial bonus, they wrote it up as additional straight time.

Isn't that illegal?

My company sent me a $100 bill in the christmas card through mail. I was like WTF, ILLEGAL. But I didn't complain. 😉

Technically you are correct. The company should have included that as income on your W2. My guess is they did not, and would get in hot trouble if anyone reported it.

BTW, the IRS has NO di-minimis rules regarding income. Gift Card, gift certificates, awards, prizes, etc. are taxable income. The only things that are usually not taxable are those "benefits" that can not be parsed out by employee (like pizza parties, lunches/dinners) or awards for length of service (if length is greater than 5 years) and safety "bonuses".

 

[CTrain]

You're looking at the situation all wrong.
You're not get taxed more on your bonuses, the government is just witholding more
You have to pay the same amout of taxes at the end of the year based on how much you make(regular paycheck or bonuses).
You just get more or less back depending on how much the government withold from you during the year.

 

[KK]

I have gotten 2 bonuses this year, so I upped my w4 allowances to ~17 to make up for it. It's going to be like getting a monthly bonus til the end of the year.

 

[CPA]

Originally posted by: KK
I have gotten 2 bonuses this year, so I upped my w4 allowances to ~17 to make up for it. It's going to be like getting a monthly bonus til the end of the year.

Just make sure that by the end of the year you didn't underpay too much. Otherwise, it's a good and applicable move you are making.

 

[KK]

Originally posted by: CPA

Originally posted by: KK
I have gotten 2 bonuses this year, so I upped my w4 allowances to ~17 to make up for it. It's going to be like getting a monthly bonus til the end of the year.

Just make sure that by the end of the year you didn't underpay too much. Otherwise, it's a good and applicable move you are making.

Will there be any major changes to the tax code, concerning the child tax credit($1000 per kid) and will the tax charts be about the same as they were for the 2005 tax year?

 

[EagleKeeper]

Originally posted by: KK

Originally posted by: CPA

Originally posted by: KK
I have gotten 2 bonuses this year, so I upped my w4 allowances to ~17 to make up for it. It's going to be like getting a monthly bonus til the end of the year.

Just make sure that by the end of the year you didn't underpay too much. Otherwise, it's a good and applicable move you are making.

Will there be any major changes to the tax code, concerning the child tax credit($1000 per kid) and will the tax charts be about the same as they were for the 2005 tax year?

Who knows what perks Congress will want to lavish on themselves this year.:|

Best thing is to look at where you stand in Oct based on the current 2005 taxes.
That will allow you time for adjustments if needed until the end of the tax year 2006.

 

[kranky]

I'm fortunate my company has always taxed bonuses as regular income. It has the side effect of having that temporary bump into a higher withholding rate for that pay period - but still better than the official bonus withholding rate.