Are bonuses taxed the same as your regular salary?

Huh? You want to expand on that?

You are taxed on your yearly income, it makes no difference at what rate you make it, some people will lead you to believe bonus are taxed more, they are not, some payroll software assumes you make that much each pay period and adjust with holdings as such, at the end of the tax year it is straightened out on your return...long story short ..... No

Thats what I needed to know, thanks.

Just for clarification, it doesn't matter how the bonuses come or for what reason it is all taxed the same correct?

At my level, we get two bonuses a year. We know what they are about a month before they get paid. Our HR dept asks us how much we want withheld for federal income and state income tax from each bonus check, and they manually do it.

I use the bonus to my advantage tax wise. I withhold a fixed amount each week for state and federal taxes. Come December I change that fixed amount per check to a fixed percentage. So when my bonus check comes in December they withhold a larger amount. Then I file my taxes a few months later and get any over payment back.

This way I am not giving the government an interest free loan over the course of a year. In essence I am getting an interest free advance that my bonus take care of

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You are taxed on your yearly income, it makes no difference at what rate you make it, some people will lead you to believe bonus are taxed more, they are not, some payroll software assumes you make that much each pay period and adjust with holdings as such, at the end of the tax year it is straightened out on your return...long story short ..... No

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What he said. A bonus just adds to your total AGI for the year and the total AGI is taxed at the "appropriate" rate. It just looks like more because most payroll groups are lazy.

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Yes it is typical monetary bonuses but can add up to 50-75% of your annual salary so just wanted to make sure since they can add up to a large amount.

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The practical effect on the withholding side is - most payroll departments will withhold from everyone's bonus, the top marginal rate in the company.

The reason, at least that I have been told is, if they underwithhold, THEY pay the penalty on it and it makes sense.

It all comes out in the wash for the individual bonus recipient, as it will either increase his refund or decrease his net tax liability, as applicable on the next tax cycle.

And, as always, Uncle Sam gets his first. Not necessarily a win-win, but there are reasons for all of that.

Another way to look at taxation of "bonuses" is, they're taxed at your own top marginal rate, as it is, conceptually, the "last" money you earned for the year, regardless of when you actually get the check. If you are a high earning W-2 employee, it might offers some solace that if you've maxed out your payroll taxes, at least you're not paying those on your bonus.

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Then I recieve bonus checks from the actual company I work for untaxed.

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You mean, "No withholding" -

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And I receive a 1099 for that money.

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See, I'm not sure I understand this. I'm guessing you're really a 1099 employee from the company, and you contract with the payroll company to do all your withholding and such and you're their W-2 employee?

But, bonuses can't work like that so the company bonuses you directly and issues a separate 1099?

That's all I can think of...

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It's a weird situation come tax time but I got a tax guy who makes it work.

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That's all that matters - if the IRS is happy, then you should be, at least, content.