Does anyone know what the rates are for year end bonuses?
In my case it will be awarded aside from the normal payroll, I will get a seperate check for my bonus.
I have looked everywhere for what the tax rate will be so I can plan accordingly, but I am unable to find anything that helps.
Does any one here have any information on how it works?
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leeappdalecom
.nettter
Where are you from?
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leeappdalecom wrote:Where are you from?
USA
I have seen some articles that state bonuses are flat taxed @ 25% and others that say it depends on the amount, which for me would be 35%.
Those numbers make a huge difference so if anyone knows anything, please say so! -
jBuelna
Never mistake motion for progress.
Awesome, I wish I could pay taxes on an end-of-year bonus. After a buyout and merger with our biggest competitor this year, our new CEO announced that no EOY bonus / no Christmas bonus is now a part of "company culture." This is the first time I have not received a Christmas bonus in 14 years.
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DivideByZero
That's no bug... it's an undocumented feature.
jBuelna wrote:Awesome, I wish I could pay taxes on an end-of-year bonus. After a buyout and merger with our biggest competitor this year, our new CEO announced that no EOY bonus / no Christmas bonus is now a part of "company culture." This is the first time I have not received a Christmas bonus in 14 years.
Amazingly enough, I seem to have experienced the exact same thing. What a coincidence.
It always gives you a warm snugly feeling inside when valueable (and highly skilled) employees get ... bah, I'm done complaining.
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jBuelna wrote:
Awesome, I wish I could pay taxes on an end-of-year bonus. After a buyout and merger with our biggest competitor this year, our new CEO announced that no EOY bonus / no Christmas bonus is now a part of "company culture." This is the first time I have not received a Christmas bonus in 14 years.
Wow, that bites. Sorry mate.
This is my first EOY bonus, I have always been a consultant until this year, and the firm I was with paid us quarterly performance bonuses, but it was taxed as regular income because the bonus wasn't split out as a seperate payment.
My understanding now is that my bonus here is taxed differently because it is a seperate payment.
I am in debt high, and am very close to being able to wipe out all my debt and get the bill collectors off my back with the number I am expecting, all a matter of what the tax rate is going to be...
I am so anxious at the possibility of finally getting back on track financially, as I've been playing 'catch up' since the events of Sept 11, 2001 -
It is taxed as income, therefore if you are already fully in the 35% tax bracket then it will be at 35%... (by fully in I mean your taxable income already falls in the 35% bracket before the bonus is added).
If the bonus pushes you into the 35% bracket then the portion of the bonus below the bracket bottom would be taxed at the next lower bracket and the portion above the line at 35%.
Perhaps you will be in a situation where the bonus will not be counted as employment income (i.e. no FICA tax also applied) and so the nominal tax rate will be somewhat less than your standard employment income tax... -
staceyw
Before C# there was darkness...
JPeless wrote:It is taxed as income, therefore if you are already fully in the 35% tax bracket then it will be at 35%... (by fully in I mean your taxable income already falls in the 35% bracket before the bonus is added).
If the bonus pushes you into the 35% bracket then the portion of the bonus below the bracket bottom would be taxed at the next lower bracket and the portion above the line at 35%.
Perhaps you will be in a situation where the bonus will not be counted as employment income (i.e. no FICA tax also applied) and so the nominal tax rate will be somewhat less than your standard employment income tax...
That is what I was going to say. It is just income. No different then a raise, etc. You just need to figure the bracket as JPeless said. -
staceyw wrote:
JPeless wrote: It is taxed as income, therefore if you are already fully in the 35% tax bracket then it will be at 35%... (by fully in I mean your taxable income already falls in the 35% bracket before the bonus is added).
If the bonus pushes you into the 35% bracket then the portion of the bonus below the bracket bottom would be taxed at the next lower bracket and the portion above the line at 35%.
Perhaps you will be in a situation where the bonus will not be counted as employment income (i.e. no FICA tax also applied) and so the nominal tax rate will be somewhat less than your standard employment income tax...
That is what I was going to say. It is just income. No different then a raise, etc. You just need to figure the bracket as JPeless said.
OK did I read this wrong?
http://www.wsgr.com/wsgr/Display.aspx?SectionName=publications/PDFSearch/clientalert_withholding.htm
Some Tax Attorney Website wrote:
Employer pays employee Bob a salary of $200,000 in 2007. The employer then decides it wants to grant Bob a $1.5 million bonus to be paid in 2007. In 2007, the employer withholds income tax from Bob's $200,000 salary and does not make any non-bonus supplemental wage payments to him during the year. In 2007, the highest rate of income tax is 35% and the rate for optional flat rate withholding is 25%.
In this example, the employer has the option to apply the optional flat rate withholding because: (i) the bonus is considered a supplemental wage payment, and (ii) the employer withheld on regular wage payments in 2007. The optional flat rate may be applied to the first $1 million paid, and Bob would be subject to 25% withholding in such an event. However, the supplemental wages above $1 million (i.e., the $500,000) would be subject to 35% mandatory withholding in 2007. The employer would not have the option to apply the 35% withholding rate for the $500,000 above the mandatory withholding threshold.
AND
http://www.payroll.ucla.edu/Charts/taxFDcur.htm
Some Payroll Site wrote:
Bonus flat tax rate is 25% for Federal & 9.3% for the State of California.
I don't live in Cali, so I am just using it as a citation for the federal rate.
Am I completely reading this wrong?
I am so unsure because I can't get a clear idea due to so many conflicting notations on different sites.
But, I did receive a $5k bonus earlier this year and it was only taxed at 25%, but that could be a coincidence?
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I think I figured it out.
I will be taxed at 25% on the bonus, but it will still be withheld at 35%.
But I should get the difference back in March when I file my taxes.
Bummer
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Red5
Systems Manager Curmudgen
phreaks wrote:I think I figured it out.
I will be taxed at 25% on the bonus, but it will still be withheld at 35%.
But I should get the difference back in March when I file my taxes.
Bummer
Don't you just love loaning your money to Uncle Sam interest free? I know he appreciates it!
EDIT: when we get bonuses, our HR won't allow me to change my withholding status for that one check. I've tried with no luck. I will be getting a "rebate" from Uncle Sam this year too.
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