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Bonus Taxation Question
Posted on 1/3/23 at 8:13 am
Posted on 1/3/23 at 8:13 am
I got a bonus at work and the tax withheld on it was 40% for FICA. What is the actual tax rate on a bonus? Reading it is 22%. Will the overage be returned at tax time? And is this the employer's tax software withholding so much?
Or is 40% the tax rate on bonuses?
Or is 40% the tax rate on bonuses?
3
Posted on 1/3/23 at 8:20 am to WhiskeyThrottle
Bonuses are generally withheld at 22%. The actual tax liability will be reflective of your effective tax rate and will be trued up when you do your return.
The employee part of FICA is 6.2% for social security (capped at 160,200 in 2023) and 1.45% for Medicare.
The employee part of FICA is 6.2% for social security (capped at 160,200 in 2023) and 1.45% for Medicare.
Posted on 1/3/23 at 8:26 am to WhiskeyThrottle
The 22% you're reading applies to FITW only (the part you can adjust via your W-4 throughout the year). Unless your bonus is over $1M, then anything over that is taxed at 37%.
As the poster above mentioned, your bonus is also subject to the 6.2% for social security (unless you grossed over $147K last year) and 1.45% for MED.
If you look at your stub and the FITW was more than 22% then you'll get trued up in your tax return.
As the poster above mentioned, your bonus is also subject to the 6.2% for social security (unless you grossed over $147K last year) and 1.45% for MED.
If you look at your stub and the FITW was more than 22% then you'll get trued up in your tax return.
Posted on 1/3/23 at 8:26 am to WhiskeyThrottle
Bonus are either taxed at a "standard" rate or at your marginal rate. Either way it will be taxed appropriately when you file.
Posted on 1/3/23 at 9:05 am to BenDover
quote:
The 22% you're reading applies to FITW only (the part you can adjust via your W-4 throughout the year). Unless your bonus is over $1M, then anything over that is taxed at 37%.
As the poster above mentioned, your bonus is also subject to the 6.2% for social security (unless you grossed over $147K last year) and 1.45% for MED.
If you look at your stub and the FITW was more than 22% then you'll get trued up in your tax return.
Perfect. Thanks for the response. Looks like the FITW was actually 32% for that line item so I guess we'll get the other 10% in tax returns.
Posted on 1/3/23 at 9:13 am to WhiskeyThrottle
Same here. It always tru’s up at tax time but I’d much rather have it now vs having to wait 16 months to get it back at filing time.
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