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KGools
Happy
Member since 9/06 9532 total posts
Name:
Kim
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Year End Bonus
So we were very fortunate to get a bonus this year. It was quite small but to be honest, I was just happy about the extra cash.
We got the bonus today and they taxed the hell out of it! And it looks like they took 2 weeks worth of taxes out (we get paid every 2 weeks).
What do you think... should they tax bonuses or not???
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Posted 12/18/09 11:54 AM  |
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Long Island's Largest Bridal Resource |
ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Year End Bonus
It doesn't matter. You don't pay "extra tax" on bonuses. It's a huge myth.
It just adds to your total income on your W2 at the end of the year.
And yes bonuses should be taxed like all other income.
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| Posted 12/18/09 12:03 PM |
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Christine
2nd verse same as the 1st
Member since 5/05 15287 total posts
Name:
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Re: Year End Bonus
It's income so it has to be taxed.
Payroll processing companies classify bonuses differently and tax them heavily because they can push you into a new tax bracket.
So if you are taxed at say 15% all year but your bonus pushes you into an 18% bracket - you would have been underpaying your taxes all year long. They calculate a catch up in there.
It's annoying since you don't expect that type of withholding but you get it back if it's too much when you file your returns next year.
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| Posted 12/18/09 12:03 PM |
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Re: Year End Bonus
It's income and therefore taxed. I have heard of some companies that inflate the bonus to compensate for taxes. Also, if the bonus is lumped into a regular paycheck then you may get hit with more taxes if it changes the rate at which you need to be taxed.
ETA: Yeah, what Christine said! 
Message edited 12/18/2009 12:32:41 PM.
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| Posted 12/18/09 12:31 PM |
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Re: Year End Bonus
Any kind of bonus I have received has always been taxed. It usually ends up working out to about 1/2 of the total amount of the bonus.
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| Posted 12/18/09 12:43 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Year End Bonus
Posted by mzsocialworker1
Any kind of bonus I have received has always been taxed. It usually ends up working out to about 1/2 of the total amount of the bonus.
Yes but in actuality, you aren't really paying 50% tax on that, even if the payroll department taxes 50% taxes out. It comes back in your refund as you only pay taxes on whatever your highest tax bracket is. It's never 50%.
The probably worst case senario, as long as you make under 372k salary, the bonus would only be taxed at 33%. If you both make under 171k, then it's 28%.
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| Posted 12/18/09 12:55 PM |
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gpsyeyes
She's my world!!!
Member since 8/06 1184 total posts
Name:
Karen
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Re: Year End Bonus
Your employer does not have to take taxes out, however, you have to pay the taxes, either way. Every year, my employer would ask us whether or not we wanted the taxes taken out. If you didn't, it would be done when you file your returns.
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| Posted 12/20/09 3:30 PM |
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jerrysgirl
I love my hot dog!!
Member since 6/06 5357 total posts
Name:
E & J
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Re: Year End Bonus
my bonus check would be the bonus only and the following paycheck would be the taxes taken it out. it was nice, but the next paycheck was so little.
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| Posted 12/20/09 4:20 PM |
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