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re: Claiming 1 vs Claiming 0 on taxes..
Posted on 8/26/16 at 9:26 am to Poodlebrain
Posted on 8/26/16 at 9:26 am to Poodlebrain
quote:
There are specific rules that employers must follow for withholding.
And I defer to you, PB, but when I was in private practice, bonuses were always withheld at the highest rate of anyone receiving the bonus. Many of us thought that was BS and that they were being lazy.
Do you have the skinny on that myth/reality?
2
Posted on 8/26/16 at 9:34 am to Ace Midnight
What I've experienced is that most HR systems aren't set up to pay bonuses correctly, or the HR people don't know how properly set up the tax with holdings for bonus checks.
So when you get a bonus, the system thinks that's your new income (extrapolates the the bonus amount will be your new comp each pay period) and then set the tax rate based on that.Dramatically overestimating it.
So when you get a bonus, the system thinks that's your new income (extrapolates the the bonus amount will be your new comp each pay period) and then set the tax rate based on that.Dramatically overestimating it.
Posted on 8/26/16 at 1:24 pm to Ace Midnight
Bonuses are covered under Supplemental Wages in Publication 15 that I linked above. Please note that there are special rules to cover people like you who are paid more than $1 million during a year.
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