Does anyone work in payroll or understand how taxes with payroll works?

This is just something I am not savvy in whatsoever.

I was supposed to get a bonus at work. At my old job, I would get a separate "bonus" check. At this job, my boss just rolled my bonus into my most recent paycheck.

Is one way better for me over the other, financially speaking? I guess in terms of taxes? I wasn't sure if I got less of a bonus because he put it in through normal payroll versus just cutting me a "bonus" check.

Re: Does anyone work in payroll or understand how taxes with payroll works?

At the end of the year it all ends up at box 1 wages and income.

Usually the bonus ends up being taxed at a higher amount because it’s a larger sum, kind of putting you at a higher rate but it all evens out at the end.

If you pay too much tax due to this, you get it back when you file your 2020 taxes. If you still end up paying too little, then you will owe.

So it doesn’t really matter.

Re: Does anyone work in payroll or understand how taxes with payroll works?

When we put a bonus through payroll, we issue a separate check so less taxes are applied.
It may be all the same in the end but in the moment it stinks when your bonus is taken down so much from taxes.

Re: Does anyone work in payroll or understand how taxes with payroll works?

Some employees make different 401k allocations because their one bonus check could fully fund their 401k, and if the employer does not true up their match at the end of the calendar year, they will loose out on match money. While you will have more taxes taken from that one check, it evens out at the end of the year and you will get any extra money back in your refund/return.

Re: Does anyone work in payroll or understand how taxes with payroll works?

Cool, thank you! I wasn’t sure if it made any difference at all. I’m a pretty smart person but once the word “tax” starts getting thrown around, it’s like speaking Greek to me. Lol Thanks for all of your help.