| Posted By |
Message |
julz33
i run for bacon
Member since 5/05 20584 total posts
Name:
julz
|
Bonuses and taxes
We are getting bonuses for the first time ever at work. Some of my coworkers were saying bonuses are taxed at a higher rate than regular paychekcs? Is this true?
I'm just trying to guess how much $ I'll be getting after taxes!
|
Posted 3/25/08 5:58 PM  |
| |
|
Long Island Weddings
Long Island's Largest Bridal Resource |
Shorty
.
Member since 5/05 30390 total posts
Name:
really
|
Re: Bonuses and taxes
hmmm....are the bonuses in the same check? if so, more taxes....
|
| Posted 3/25/08 5:59 PM |
| |
|
FelAndJon
needs to update her avatar pic
Member since 6/05 10212 total posts
Name:
Felice (aka LuckyBride2004)
|
Re: Bonuses and taxes
It should only be higher if it puts you into a higher tax bracket.
|
| Posted 3/25/08 5:59 PM |
| |
|
Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
|
Re: Bonuses and taxes
It's not that bonuses themselves are taxed at a higher rate, it's that your firm's software will apply a higher rate of tax to that check - IF the check is more than what you normally get in pay period.
For example, if you get taxed weekly, your company's software will take that rate and multiply it by 52 weeks per year to get your income for determining your tax rate. It's possible that your company's software, when processing your bonus checks, will do the same with the amount of your bonus check, which could make it act as if, for purposes of that check only, you are in a higher tax bracket. Therefore, you'll take home less. What you owe to the IRS at the end of the year, however, will be determined by your actual total income...
Hope that makes sense. If you're already in a pretty high tax bracket or if your bonus isn't huge compared to a regular paycheck, you shouldn't have too much more than expected taken out.
|
| Posted 3/25/08 6:06 PM |
| |
|
julz33
i run for bacon
Member since 5/05 20584 total posts
Name:
julz
|
Re: Bonuses and taxes
Posted by Shorty
hmmm....are the bonuses in the same check? if so, more taxes....
Yes... same check so more taxes. But what one of my coworkers said is the tax RATE is higher so we sould only expect to see 1/2 of the bonus 
|
| Posted 3/25/08 6:06 PM |
| |
|
Lisa
I'm a PANK!!!
Member since 5/05 22334 total posts
Name:
Professional Aunts No Kids
|
Re: Bonuses and taxes
My bonuses have always been taxed at a higher rate. Usually around 50%. In order to help the sting, I allocate at least 20% of the total into my 401K....therefore reducing the amout to be taxed.
|
| Posted 3/25/08 6:08 PM |
| |
|
Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
|
Re: Bonuses and taxes
Posted by julz33
Posted by Shorty
hmmm....are the bonuses in the same check? if so, more taxes....
Yes... same check so more taxes. But what one of my coworkers said is the tax RATE is higher so we sould only expect to see 1/2 of the bonus
See my post. The tax rate applied to that check may be higher, but what you owe to the IRS at the end of the year will be based on total compensation. The IRS doesn't apply a different tax rate to bonus money. The software processing your checks, however, treats it as a single payment period -- and if all your regular checks were as high as your bonus, a different rate of tax would apply.
More taxes may be withheld now, but at the end of the year, the IRS doen't go -- okay, so 100,000 of your money will be taxed at Y and $5,000 (your bonus) will be taxed at Z. 105,000 will be taxed at R.
|
| Posted 3/25/08 6:10 PM |
| |
|
ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
|
Re: Bonuses and taxes
Posted by Kara
Posted by julz33
Posted by Shorty
hmmm....are the bonuses in the same check? if so, more taxes....
Yes... same check so more taxes. But what one of my coworkers said is the tax RATE is higher so we sould only expect to see 1/2 of the bonus
See my post. The tax rate applied to that check may be higher, but what you owe to the IRS at the end of the year will be based on total compensation. The IRS doesn't apply a different tax rate to bonus money. The software processing your checks, however, treats it as a single payment period -- and if all your regular checks were as high as your bonus, a different rate of tax would apply.
More taxes may be withheld now, but at the end of the year, the IRS doen't go -- okay, so 100,000 of your money will be taxed at Y and $5,000 (your bonus) will be taxed at Z. 105,000 will be taxed at R.
Yes. Thank you.
Bonus money shows up on your year end W2 no different than your regular wages so you are taxed no differently.
Employers typically take out more tax for a bonus so it helps eliminate the chance that you may owe money at the end of the year.
But bonus money isn't taxed anymore than regular wages.
|
| Posted 3/25/08 6:14 PM |
| |
|
julz33
i run for bacon
Member since 5/05 20584 total posts
Name:
julz
|
Re: Bonuses and taxes
Thank you! 
I can't wait to see on Friday!
|
| Posted 3/25/08 6:17 PM |
| |
|
ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
|
Re: Bonuses and taxes
Posted by julz33
Thank you!
I can't wait to see on Friday!
And don't forget to correct your coworkers.
You aren't "taxed more". More is "withheld". 
There is a big difference.
Message edited 3/25/2008 6:25:33 PM.
|
| Posted 3/25/08 6:25 PM |
| |
|
Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
|
Re: Bonuses and taxes
Posted by ave1024
Posted by julz33
Thank you!
I can't wait to see on Friday!
And don't forget to correct your coworkers.
You aren't "taxed more". More is "withheld".
There is a big difference.
Exactly!
|
| Posted 3/25/08 6:40 PM |
| |
|
dani731
Blessed!!!
Member since 1/08 3355 total posts
Name:
D
|
Re: Bonuses and taxes
Posted by Kara
Posted by ave1024
Posted by julz33
Thank you!
I can't wait to see on Friday!
And don't forget to correct your coworkers.
You aren't "taxed more". More is "withheld".
There is a big difference.
Exactly!
Yup! This is true! I just got my bonus last week. I hate how much they withhold. My job withholds 40% in taxes for bonuses.
Message edited 3/25/2008 7:21:40 PM.
|
| Posted 3/25/08 7:20 PM |
| |
|
kmac
Two under two!
Member since 5/07 3703 total posts
Name:
Kris
|
Re: Bonuses and taxes
Posted by julz33
We are getting bonuses for the first time ever at work. Some of my coworkers were saying bonuses are taxed at a higher rate than regular paychekcs? Is this true?
I'm just trying to guess how much $ I'll be getting after taxes!
They are taxed--someone at DH's work said half but it wasn't that much. My DH got a nice bonus this year and we got nailed when doing our taxes...we never owed before this year.
|
| Posted 3/25/08 8:06 PM |
| |
|
SweetTooth
I'm a tired mommy!
Member since 12/05 20105 total posts
Name:
Lauren
|
Re: Bonuses and taxes
I got a bonus for the first time a couple of weeks ago it was in a separate check and they took almost half in taxes. It was ridiculous.
|
| Posted 3/25/08 8:09 PM |
| |
|
MrsCJK
Thankful!
Member since 11/06 1773 total posts
Name:
Cal
|
Re: Bonuses and taxes
Typically any type of bonus or commission is taxed at 48% which cuts the bonus in half
|
| Posted 3/25/08 8:14 PM |
| |
|
ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
|
Re: Bonuses and taxes
Posted by MrsCJK
Typically any type of bonus or commission is taxed at 48% which cuts the bonus in half
Again... they may WITHHOLD 48% but you aren't taxed at 48% for this income.
Why don't you just beat the system? If you know for sure you are getting a bonus, just get friendly with your payroll department and ask them to not withhold taxes on your bonus. Problem solved.
I actually did this once when they announced my bonus weeks before I got it. I asked payroll to not withhold. They took out FICA and medicare. I think it was like 9% total they took out.
|
| Posted 3/25/08 8:22 PM |
| |
|
pinkandblue
Our family is complete, maybe
Member since 9/05 32436 total posts
Name:
Stephanie
|
Re: Bonuses and taxes
For my job, 48% is withheld 
Message edited 3/25/2008 8:37:43 PM.
|
| Posted 3/25/08 8:31 PM |
| |
|
SweetestOfPeas
J'taime Paris!
Member since 3/06 32345 total posts
Name:
|
Re: Bonuses and taxes
it depends... some bonuses are taxed like commission, at 40%
|
| Posted 3/25/08 8:51 PM |
| |
|
JenniferEver
The Disney Lady
Member since 5/05 18163 total posts
Name:
Jennifer
|
Re: Bonuses and taxes
Posted by Kara
Posted by ave1024
Posted by julz33
Thank you!
I can't wait to see on Friday!
And don't forget to correct your coworkers.
You aren't "taxed more". More is "withheld".
There is a big difference.
Exactly!
Yep. Hopefully it will just mean a bigger refund
|
| Posted 3/25/08 8:53 PM |
| |
|
SweetTooth
I'm a tired mommy!
Member since 12/05 20105 total posts
Name:
Lauren
|
Re: Bonuses and taxes
Posted by JenniferEver
Posted by Kara
Posted by ave1024
Posted by julz33
Thank you!
I can't wait to see on Friday!
And don't forget to correct your coworkers.
You aren't "taxed more". More is "withheld".
There is a big difference.
Exactly!
Yep. Hopefully it will just mean a bigger refund
but that doesn't mean I don't want the money now! not a year from now. and also why should I be giving the government that loan intersest free?
and by "I" I mean the collective I
|
| Posted 3/25/08 9:11 PM |
| |
|
CrankyPants
I'm cranky
Member since 7/06 18178 total posts
Name:
Mama Cranky
|
Re: Bonuses and taxes
Posted by SweetestOfPeas
it depends... some bonuses are taxed like commission, at 40%
Same for me, about 40% withheld.
|
| Posted 3/25/08 9:15 PM |
| |
|
ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
|
Re: Bonuses and taxes
Posted by SweetTooth
Posted by JenniferEver
Posted by Kara
Posted by ave1024
Posted by julz33
Thank you!
I can't wait to see on Friday!
And don't forget to correct your coworkers.
You aren't "taxed more". More is "withheld".
There is a big difference.
Exactly!
Yep. Hopefully it will just mean a bigger refund
but that doesn't mean I don't want the money now! not a year from now. and also why should I be giving the government that loan intersest free?
and by "I" I mean the collective I
Then fill out a W4 form... claim something crazy like 10 or 15 exemptions. Then the next paycheck you get they will withhold a lot less.
Then fill out another W4 with the correct amount a paycheck or two later. You will get your money quicker this way.
Problem solved.
|
| Posted 3/25/08 10:15 PM |
| |
|
JenniferEver
The Disney Lady
Member since 5/05 18163 total posts
Name:
Jennifer
|
Re: Bonuses and taxes
Posted by SweetTooth
Posted by JenniferEver
Posted by Kara
Posted by ave1024
Posted by julz33
Thank you!
I can't wait to see on Friday!
And don't forget to correct your coworkers.
You aren't "taxed more". More is "withheld".
There is a big difference.
Exactly!
Yep. Hopefully it will just mean a bigger refund
but that doesn't mean I don't want the money now! not a year from now. and also why should I be giving the government that loan intersest free?
and by "I" I mean the collective I
I hear you. My bonus was taxed..erm..withheld like whoa. I want the money now.
|
| Posted 3/25/08 10:27 PM |
| |
|
csorisi
My 2 LOVES
Member since 11/05 1984 total posts
Name:
Corinne
|
Re: Bonuses and taxes
I got a bonus last year around the holidays and nothing was really withheld from my check--maybe just social security i think. I got most of my bonus (like 90%)--I don't know what they do or why it is different then anyone else
but i don't mind.
|
| Posted 3/25/08 10:34 PM |
| |
|
