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re: bonuses and taxes
Posted on 3/13/15 at 11:50 am to swanny297
Posted on 3/13/15 at 11:50 am to swanny297
quote:
My federal withholding on my bonus has always been much higher than my federal withholding for my monthly gross salary, how are they not taxed differently?
Because you aren't getting taxed every paycheck. You get taxed on April 15. The withholdings are usually just based on a projection of what your gross income (and ultimately what taxes you're going to owe) is going to be, based on things like the amount of the check and assuming that forward until the end of the year. Because of how the withholding is calculated, what happens is that large one-off checks often end up skewing high and getting a higher withholding percentage than usual payroll checks.
However, the actual tax you owe isn't known until you calculate and file your tax return. Once you have calculated the tax you owe the government, all of the withholdings that you made over the year are subtracted from the tax due. If the withholdings were too high and you had more money withheld and sent to the government than you actually owed, you get a refund check. Without interest, of course.
That's the general idea.
This post was edited on 3/13/15 at 11:57 am
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