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Message
Bonuses - How are they usually taxed?
Posted on 2/19/19 at 3:02 pm
Posted on 2/19/19 at 3:02 pm
What factors play into it?
This post was edited on 2/19/19 at 3:05 pm
15
Posted on 2/19/19 at 3:07 pm to jmorr34
25% across the board? I'm curious about this as well. What if the bonus is tacked on to your regular paycheck?
Posted on 2/19/19 at 3:11 pm to jmorr34
I think it's 22% now for supplemental bonuses.
Posted on 2/19/19 at 3:12 pm to jmorr34
Posted on 2/19/19 at 3:17 pm to DFWgolfer318
but after social security, medicare, and state taxes its more like 35-40% total?
Posted on 2/19/19 at 3:21 pm to jmorr34
quote:
but after social security, medicare, and state taxes its more like 35-40% total?
Around 32.5%, but if your tax rate is less than 25% (it likely will be since that is a flat, not a marginal rate), you'll get it back when you file your return for that year.
Posted on 2/19/19 at 3:22 pm to jmorr34
Been at 33% for me the last two years.
Posted on 2/19/19 at 3:29 pm to jmorr34
quote:your total income.
What factors play into it?
You can have it taken now or next year. Your call.
Typically HR will ask if you want to adjust your rate (higher, not lower). Required withholding is 22%
Posted on 2/19/19 at 3:30 pm to jmorr34
Every company is a little different. Mine takes 25% for federal which is fine unless your effective rate is higher than 25% and you may need to withhold extra to cover.
As Golfer said, bonuses are just ordinary income in the year they are paid to the employee.
As Golfer said, bonuses are just ordinary income in the year they are paid to the employee.
This post was edited on 2/19/19 at 3:37 pm
Posted on 2/19/19 at 3:34 pm to jmorr34
They're taxed as ordinary income.
How you (or your company) decides to withhold is another issue.
How you (or your company) decides to withhold is another issue.
This post was edited on 2/19/19 at 3:35 pm
Posted on 2/19/19 at 3:38 pm to lynxcat
quote:
Every company is a little different. Mine takes 25% for federal which is fine unless your effective rate is higher than 25% and you may need to withhold extra to cover
Just for reference, a single filer would have to make like 225k for this to be an issue
Posted on 2/19/19 at 3:48 pm to jmorr34
Mine are taxed at 40%
Edit: Rofl 4 downvotes? Maybe I should tell HR to read the money board more
Edit: Rofl 4 downvotes? Maybe I should tell HR to read the money board more
This post was edited on 2/20/19 at 10:03 am
Posted on 2/19/19 at 4:20 pm to jmorr34
Bonuses are just part of your wage income for tax calculation purposes.
For withholding, many companies will withhold at 22 percent. Some companies treat it as a super-large regular paycheck.
For withholding, many companies will withhold at 22 percent. Some companies treat it as a super-large regular paycheck.
Posted on 2/19/19 at 4:39 pm to Golfer
Some companies will withhold more taxes on a bonus because the payroll software thinks you're making that much money each cycle for the rest of the year.
So that is why people think bonuses are taxed more than regular salary but it's not. When you file your taxes you'll get a bigger refund because of the extra taxes on the bonus. Though if your bonus puts you into a higher tax bracket that's different.
So that is why people think bonuses are taxed more than regular salary but it's not. When you file your taxes you'll get a bigger refund because of the extra taxes on the bonus. Though if your bonus puts you into a higher tax bracket that's different.
Posted on 2/19/19 at 5:04 pm to jmorr34
With all the state and federal taxes, I net exactly 60%.
Posted on 2/19/19 at 5:40 pm to gpburdell
quote:
companies will withhold more taxes on a bonus because the payroll software thinks you're making that much money each cycle for the rest of the year.
This.... It is taxed like ordinary income. However the taxes withheld are assuming you make that every paycheck.
Posted on 2/19/19 at 6:01 pm to DFWgolfer318
quote:
Just for reference, a single filer would have to make like 225k for this to be an issue
Likely more than that depending on the deductions a filer takes (12K Standard, 19K 401K, ~4K HSA). This is part of the reasoning why companies have such high withholding rates on bonuses. If company policy under withheld bonuses, it could create major tax issues for an employee. Most employees aren't modeling out their expected taxes each year so this is a safety measure built into payroll.
Posted on 2/19/19 at 6:09 pm to lynxcat
quote:
Likely more than that depending on the deductions a filer takes
You're right, I was thinking AGI but didn't specify
Posted on 2/19/19 at 7:36 pm to jmorr34
Anybody who asks this question doesn’t deserve a bonus.
For the last time. They are taxed at the “normal” marginal tax rate. Your employer payroll software will usually WITHHOLD (not tax) an amount that assumes that check is what your normal paycheck averages.
For the last time. They are taxed at the “normal” marginal tax rate. Your employer payroll software will usually WITHHOLD (not tax) an amount that assumes that check is what your normal paycheck averages.
Posted on 2/20/19 at 5:51 am to TigerDeBaiter
quote:Oh gee. frick the guy for trying to learn, right?
Anybody who asks this question doesn’t deserve a bonus.
Lots of younger guys entering the workforce who probably have never done their taxes around here.
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