Adjusting tax withholding for annual bonus

Income is income is income. You aren't going to pay a higher or lower percentage of taxes just because it is a bonus.

If your salary is $100,000 per year and you know you'll get 25,000 at the end of the year, adjust your withholdings accordingly.

To answer your question, it doesn't matter. There isn't a way to game the system that I know about.

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it doesn't matter

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Withholding is higher on a "bonus" thanks to Bill Clinton punishing the rich people. When you figure the taxes at the end of the year it will all be figured at yoy regular tax rate.If you do nothing you are making the gvt a tax free loan for over a year. I claim an extra exemption or 2 all year so that doesnt happen.

Depends on the payroll software and settings.

Most tax withholdings get calculated based on the combination of the amount paid and the frequency.

If the payroll dept has set up $xxx paid 24 or 26 times a year, it applies certain withholding tables on an annualized basis.

If a once a year bonus is paid and its frequency calculation is is the same as your regular pay, the software will multiply the 1x bonus by the 24 or 26 pay periods and assume you make that rate for the rest of the year and deduct a shite ton of taxes at the highest rates.

In those cases, you want minimal deductions. Take your dependants up to 9 or something for that one payroll maybe.

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If your salary is $100,000 per year and you know you'll get 25,000 at the end of the year, adjust your withholdings accordingly.

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Your company is suppose to do this. Basically, at $100,000, you're probably in the 25% bracket (unless you have a spouse making a lot of money) and 6% state. You're also looking at approx. 7.5% FICA, etc. So, they should withhold about 38.5% from any bonus.

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You pay it now or you pay it laterI would rather have a lower withholding all year long and crank it up at year end. Doing it this way makes little sense.

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Not necessarily true, they may treat it as his regular wage this time and every other, and would result in having too much withheld at year end. That's how my old employer was. If the OP isn't in the highest bracket already, he will be for the bonus pay period, and I doubt that they adjust other periods accordingly. Although you could be correct if you are interpreting what he said literally as he gets his salary as his bonu, which isn't really a bonus at all.

Like other posters have said, either up your exemptions or calc out your own withholding based on tax rate and tell payroll to with old that amount.

All of the payroll software I've seen will generate the appropriate withholding based on the information entered. If the employer provides the proper information indicating the payment is a bonus, then the payroll software will calculate withholding for a bonus payment, even if the bonus payment is made with a regular paycheck rather than as a separate check/payment.