Tax advantages to lower salary and very large bonus?

[FoBoT]

just because they withhold from bonus checks at the highest rate doesn't mean you pay that rate when you file. your actual rate for the whole year is based on your entire tax return information. the withholding for a single bonus check is based on just that payout, not your entire tax profile.

withholding isn't "paying" taxes. it is like a deposit you give them ahead of time that is applied toward your tax bill when you file your return and the actual amount you owe is determined

 

[CTrain]

Yeah, I finally get it now..

I do pay the same amount at the end of the year regardless...
They just withhold more taxes from my bonus checks...

I got confused

 

[Phoenix86]

Dave is very correct. You get more taxes taken out of the check on payday, but on April 15th it's all the same type of income.

 

[spidey07]

Originally posted by: CTrain

Originally posted by: DaveSimmons

Originally posted by: CTrain
NO, my bonus paychecks come every month.

My regular paychecks, I gross around $700 and take home is about $525.
One of my bonus paycheck, I grossed $650 and take home was $400.
And yes, they are all included on the W-2.

Before, a long time ago, bonus checks were included in the regular paychecks and they were taxed the same but since they seperated the 2, bonus checks are always taxed more.

But that's just witholding, not what you actually pay at the end of the year on your 1040.

If it appears on your W-2 mixed in with your regular wages then you are not being taxed more when you actually pay your taxes.

Good lord man, what on earth are you talking about....I think I do know how my paychecks are taxed.

Two yrs ago year ago, my salary was $32,500 and my bonus was more than $10K and my W-2 shows that I made ~$43,000 as it should be.
When I do get my bonus checks individually, they are always taxed more than my regular checks.

I never said how your bonuses are taxed but mine are taxed more...plain and simple.

Heres are 2 exact examples that I found in my old stubs:

Regular paycheck:
$663.46- Gross pay
- $66.04- Federal tax
- $9.62- Fed Medicare
- $41.13- Fed Social S

Bonus paycheck:
$652.67- Gross pay
- $163.17- Federal tax
- $9.62- Fed Medicare
- $40.47- Fed Social S

Bonuses are taxed the same as wages. I used to think they were taxed higher until I looked it up. Same rate as far as I know.

 

[spidey07]

Also I believe most CEO bonuses are tied to company performance.

So the salary is just base with bonus a direct percentage of earnings or earnings per share.

 

[Minjin]

How do people make $45k a year and not understand how the Federal Income Tax works? 😕

Mark

 

[CTrain]

Originally posted by: Minjin
How do people make $45k a year and not understand how the Federal Income Tax works? 😕

Mark

Boy, you like to beat on a dead horse don't you ??
I got wording confused...I get it what the OP was asking now.

But literally, they do tax bonus checks more ya know😉