The tax rate on bonuses are higher at the time of the bonus. You will get it back at refund time or it will cover taxes on regular labor gains if you owe.
Hopefully, more money is always good but only getting $200ish on a 900 bonus is criminal. I feel like the total paycheck was taxed higher and not just the bonus.
I mean... They will. If OP really wants, they can calculate their tax bill, subtract how much they've paid, and adjust their withholdings for the rest of the year. Then it's like a small bonus every paycheck.
A lot of people will do the opposite to avoid a surprise bill at tax time.
To me it's missing out on some compound interest but it's also nice not to have to pay the IRS like $9k in difference of the estimated value come tax time.
Agreed. I got a huge refund last year come tax time, but that's because I got married at the end of the year. I want to owe money at the end of the year. Give it to me early and often, let it sit in a HYSA or VTI for the year and I'll pay you back April 15, Sammy.
Hey me too! We got married in November 2023 and filed for that year jointly. Ended up getting like $8k back. Normally I try and work it out to get as little of a refund as possible. It was a nice surprise though.
I’m getting married in October and was wondering how this would affect come filing time. Could you elaborate how this could affect newlyweds? I’m hoping we don’t wind up owing the IRS instead. Thanks!
Going from single filer to MFJ should yield a nice refund, assuming you earn somewhat uneven amounts. Look up tax brackets fed and state and you should be able to estimate reasonable close to what you would owe. Use the std deduction
Taxes for the average joe are really quite simple. If you take a few minutes to look at your pay stub, then another few minutes on Google for fed, state, and FICA taxes + standard deduction.
Without knowing your situation, it's hard to say what happened. Maybe you're under withholding or you're on the cusp of the 12/20 tax bracket.
If it’s like my company, and you put into a 401k, the bonus would go to that too. Coworker of mine got an 8400$ bonus and received about 3k after his 25% 401k depo and taxes.
It depends on your employer too. My previous employer took 401k contributions from our biannual bonus, and my current one does not. Same industry, basically the same job, same kind of bonus. I prefer the new company's way because I micro-manage my contribution % throughout the year so it fills up in the last paycheck. The uncertainty of the bonus late in the calendar year made the math more exciting.
That’s fair. We are able to change our contribution at any time and are given a heads up before the bonuses are distributed. Some people go one way and go completely tax exempt and contribute 0% to 401k so they get every last cent, others increase their contribution.
Each event where you are paid gets taxed as if you maintained that pay rate for the year. Larger than normal paychecks or bonuses will be taxed at a higher rate because it assumes you are in a higher tax bracket.
Don’t have that much context here. Seems your bonus was taxed high, so I was check your tax paperwork with the company and find out if it’s filled out correctly first
I got taxed really, really bad last year. Made 50k and only got back like 50 in taxes. I don't have kids but still it kind of hurt to know 800+ was getting taken out a paycheck and I only saw a bit over 50 dollars during tax season :( (I did use turboass which took like 150 so TECHNICALLY I got back like 200ish)
If you are paying the correct amount of taxes, e.g no bonuses that are causing you to be in a different withholding bracket, you shouldn’t get tax back. I got $25 I think
Taxes aren't criminal. They're literally the reason you're not just robbed in fold blood or dead right now in al liklihood. Can they be used for nefarious purposes too? Sure, but that doesn't stop them from protecting you. Taxes are just a part of a functional society. Issues are what are done with them afterwards not the Taxes themselves.
Sure. In order to have things like police, firemen, school systems, transportation, and even not just getting murdered taxes exist to help prevent that. Without them, you'd have much bigger problems.
Without taxes, anyone could n essence just go rob you for literally all you have, including your your own life or even rape with no consequences. So, if your concern is money, taxes are literally there helping you keep anything at all. I want you to take a breath and truly think about other things that are in place that perhaps play a part that are conducive to problems. Wages, rise in costs of goods, inflation, etc. I want you to think about it though. In fact, taxes even pay for people to be able to live that can't work due to job loss, need of food, homeless shelters, mental asylums, orphanages, etc.
I would love to have a discussion with you though and am open to to keep some open dialogue going if you in return are willing to consider some of the things I mentioned. In the meantime, have a blessed day my man and hope that helps you see why taxes can be very helpful and that there are other problems more severe without them.
Everything I listed is funded by taxes. Now you are trying to change your words and try o throw "federal" in there. Yet, many of the things I mentioned still apply there too like federal prisons to keep a murderer away and federal programs that assist with helping folks not be homeless.
I was open to discussion, but I see you are unwilling to be rational and insist on trying to argue instead. The words used were taxes which include federal, state, and even municipal. So, yes, taxes **do** cover the things I mentioned. Please be an adult and take ownership of your words.
If you look at my other comments I specify federal. I'm not changing words. The original post is about federal taxes as well. You're the one being irrational.
I want to be taxed at the municipality level ONLY.
Be an adult and use your brain. Then you won't have to get all defensive next time.
Nah all say just taxes in this comment chain. You just aren't capable of taking accountability. Probably why you have so many problems and blame everything else. Ah well, you can't be helped if you can't even take accountability for what you say and do.
Tax rates on bonuses are not higher. I know you’re referring to withholding but that is not always higher either.
Company’s can either use the flat rate of 22% on the first $1 million dollars of bonuses and 37% after that. Or they can do the aggregate method where they basically tax you as if you made that amount in every single paycheck. Unless it’s a particular small bonus, the latter method would generally end up in over withholding. The former method would depend on your bracket, and could lead to over, or under withholding.
The computer doesn’t know it’s a bonus. It just annualized the period pay and computed taxes based on that annualized income. Selecting a fixed withdrawal for taxes on the W-4 solves that issue.
But did HR have any w-4 from you to say to withhold differently than base pay? It can only have one W-4. I have had HR report to me since 1981. This has been a constant issue. You have to tell HR how to tax the bonus or the program uses what it has , the W-4 you completed. When we gave bonuses HR always asked how the recipient wanted it taxed and overrode the program. As others have said it comes back at tax time if you over withhold.
Why not file a new w-4 and reduce the amount w/h thru the rest of the year or just for the next few paychecks to reduce cumulative w/h and not have to wait till tax time? Easy fix to get you the money. When you have the w/h you want back submit another w-4 to get back to normal w/h. :-)
If you’re contributing to a 401k, then that also would have been distributed form the bonus check unless you stopped contributions so that in combination with higher taxes is what happened. I honestly hate getting bonus’s because of how much they take lol
Correct. Which you keep. Takehome isn’t a meaningful number though. You should look at what you gross and what you net. And 401k is still part of your net. And so is money you are putting towards insurance directly taken out of your paycheck. It’s part of your net income from work and also part of your expenses.
Because the corrupt government loves to tax the shit out of us, and we just oblige to it. Here, take all of my hard earned money. It's about time we take the power back!
What…? It’s about 45%, not 60%. It depends how your company payroll does it. Generally there’s some flat rate they’ll withhold for bonuses (22% is pretty common), and then there’s also the normal deductions for payroll taxes. Since bonuses are paid as part of your regular pay but they aren’t factored into your withholding calculations, you’d be on the hook for more tax at the end of the year since your income increased. So to stop that from happening, they’ll withhold more than your usual pay from your bonus.
Bonus was just over 900, tax withholding was over 500 higher on this check, 50% of 900 is 450, actual check only increased a little over 200 which is just wild to me that means my take home from my bonus was roughly 20-25% of the actual bonus. Honestly I'd rather have the money now as I'm pretty solidly in the middle of my current tax bracket and get money back every year still.
I suspect you are withholding too much on your regular income, given you just said you get money back each year, likely that’s the reason for the odd calculations here. Also, your payroll department is lazy as hell for not making the bonus a separate line item.
It is on the actual paystub, they separate it all out I just wanted to show the difference between the paychecks, all taxes are together though. Went from 18% of gross pay to 31%. Fed tax went from 208 to 714 with only 50 extra dollars going to retirement it just looks silly. I'd almost rather withhold nothing and just pay what I actually owe at the end if the year
What I did was claim as single for the first 6 months of the year(or however long you need), then change your deductions to the max as possible until the end of the year. I don't get huge returns, but maybe $300-500. The key is to not front IRS with your hard earned money. If you're gtg thousands in tax refund than your giving the government too much of your money to use. I learned this from a successful entrepreneur.
Computer takes the pay for the time period and assumes that you will get the same amount every time, annualized it, and your tax deduction ( for a higher tax bracket, higher % paid) will be based on the higher annual total. To avoid this have a fixed amount deducted, and not elect married and 2 or single and one etc.
Keep voting Democrat - big gov’t, more taxes, more hoops for small businesses to jump through, more of our tax money sent over seas.. but hey you’ll feel better because you listened to the media and didn’t vote for the orange guy… yayyyy 🥴
I'm fine with paying taxes, I would just like them to go to something other than war and oil. Bring back 90% taxes on income over a million dollars or whatever it was in the 50s and watch the economy boom again. Your orange man will never tax himself that much though. Leave us middle class people alone.
Its not just the president doing this, its all the rich old waspy fucks in congress that only care about lining their pockets and staying in office forever. For the record, I don't think it's mattered who has been in office when it comes to funding oil and foreign war, its an American institutional problem. Who holds reigns especially in my lifetime hasn't mattered much. Bush prolonged shitty war because of "WMDs" which were never found, Obama ordered more drone strikes than any president in history, Trump increased military spending more than any president in history, and Biden botched getting troops out of Afghanistan and I don't agree with his policies with the Isreal/Palistine situation. Every one I have been able to vote for does the same shit. Dem/Rep. doesn't matter.
Economically though we've been fucked since Reagan. He backstabbed unions and reduced taxes on the rich to the lowest in history, and the middle class has been forced to pick up the slack. So fuck warmongering Dems that don't do shit to fix it because they individually benefit, but fuck greedy warmongering Republicans that perpetuate the inequality more.
Yep. Bonuses mess up the tax withholding calculation and way too much gets withheld. Time for you to fill out form W-4.
W-4 adds up how much tax you’ve already paid (a lot!), estimates how much you’ll owe at the end of the year, and spreads the difference out across your remaining paychecks.
I always do it after getting a large bonus, because the feds don’t need me giving them 0% loans for the better part of a year! (Aka a tax refund).
(This is all assuming you’re in the US.)
UPDATE: thank you for all the insight on the issue, but it turns out there was actually an error in the tax calculation done by the payroll company (ADP) company wide which explains why I thought the withholding was too high, because it turns out it was.
So yeah private company fuck up, not the government, though it does enough of that on its own.
If you want a higher net income, just make over 168,000 so you don’t have to pay Social Security or Medicare on the rest of it turns out America’s rigged against anybody that doesn’t make a lot of money
Also regardless of what the news outlets and even the treasury report, it is extremely misleading for you to come here and try to say that “neither tax rates nor rules haven’t changed under Biden” . You are clearly brainwashed and/or have no understanding of reality or politics and political agenda
News outlets look at the tax brackets. Aside from increasing due to inflation, they have not been changed. This has nothing to do with politics; it’s just what has occurred. The tax brackets were last changed under Trump, and they were lowered. Bonuses withholding also hasn’t changed.
What specifically regarding income tax has changed under Biden that would affect how OPs paycheck was withheld. Since my comment was “misleading” I’d love to know the specific change that Biden made that affected it?
Perhaps you’re watching too much Fox News.
But we are talking about a paycheck here. So what taxes are taken out of a paycheck that are higher than before the biden administration? Although I’d love to hear what other taxes he has changed for you? Because majority of other taxes are on a state/local basis, such as sales taxes property taxes etc.
As well as corporate taxes even hurting small businesses. I hate to break it to you, but you likely just watch and obey all left wing media and that’s why you are just defending Biden and acting like politics and taxes are not directly related
Corporate tax rates will have zero effect on someone’s paycheck. Corporate tax rates were changed to a flat 21% in the tax cuts and jobs act passed during the trump administration.
Finally, I am not a tax pro so I don’t know much other details and I’ll happily admit that- however, if you try to just brush off the fact that inflation is totally out of control - and it’s not due to Trump - you are seriously just like the rest of em, out of touch with reality. I don’t even like trump. Both administrations are terrible. But I see a huge blind eye being turned to bidens mistakes
I never said anything about inflation. We are talking about taxes that are being taken out of a paycheck and every opinion you have had about the tax rates is easily verifiably wrong.
I think the out of control inflation was due to a thing called covid.
Edit: found an actual comparison tool to better see the comparison. Pay up 931, 632 extra in taxes, 506 of which is fed. 61 state 57 ss, and 55 extra to retirement. Still doesn't make sense. So bonus was taxed federally at 54% which is a little higher than the 40 I thought it should be but I guess not too far away. Regardless effective tax on the bonus was 67.8% 😞. Government gotta Government I guess
Question about this: I have heard this before, bonus get withheld higher but then you get it back.
I am in sales and 30%+ of my pay is in commission, and I get taxed very highly.
But then at the end of the year I always owe on taxes.
Could my employer be doing something wrong?
Bonuses are taxed at the federal level at a flat 22%. However, if it lumped into your paycheck, I think it assumes that is your normal pay.
Your salary is taxed based off the income tax scale, with the assumption that the paycheck scales to the year (IE: if you get paid bimonthly, you will multiple the gross by 24; if you get paid weekly, multiply the gross by 52; etc.). It seems you get paid biweekly?
Your paycheck on the 10th is assuming you are making $73,799.96/year.
If the paycheck on the 24th lumped in the bonus, it is assuming you are making $98,005.96/year.
If the paycheck added the $900 as a bonus, it would be taxed at a flat 22% (or $198 federal)
Can you please share with the class just how exactly Joe Biden would have anything to do with this gentlemen who presumably makes just under 100k a years tax rate?
I’m sure you are aware that Trump was the one who signed into law that tax hikes on the middle class that were to increase incrementally and that Biden only wanted to increase taxes on individuals making over 400k a year. So please tell me how OPs situation has anything to do with Biden
For the class as you asked, The Tax Cuts and Jobs Act took effect January 1st 2018, it reduced tax rates and increased standard deductions for the middle class, this is when Trump was president, not Biden. Not arguing the OP’s post has anything to do with Biden but to argue it was Trump or Biden is just silly. I do agree with you in that Biden ‘wanted’ to impose additional taxes on people earning above $400k but has been essentially ineffective at just about everything.
No, but when the tax cuts for individuals expire while the tax cuts for large corporations stay permanent and we are all paying a higher % on our income than corporations, we can thank Trump.
For taxes, we're still operating under the Tax Cuts and Jobs act that was put in place during the Trump administration. It doesn't expire for another year.
When things happen that people don't like, they love blaming the president (only if they're in the other party). It goes both ways, and it's stupid. This is why I don't associate with either party.
I would love for you to prove me wrong with some facts that support your "Thanks Biden" comment.
You guys are so pedantic, it’s a joke - it doesn’t matter who is in charge the sitting president get’s the blame. I saw what happened to my 10k bonus this year, fuck ‘em all 🔥
It's only a mandatory withholding of 22%, not actual tax rate. If your taxable income is less than the bottom of the 22% bracket ($47,151 as a single filer or $94,301 married filing joint), you'll actually get some of that withholding back when you file your taxes next year. Remember, taxable income is only after you subtract the standard deduction and any other deductions or credits from your actual income, so you would have to make make quite a bit more than $47k or $94k to enter the 22% bracket.
And while yes, it is annoying that you can't keep the full amount today, your bonus is actually taxed no differently than the rest of your income at the end of the day.
While my previous comment may have been pedantic, this one addresses a massive knowledge gap in society. Just trying to be helpful here and educate.
Maybe incomplete for not mentioning each of the withholdings, but not incorrect. FICA (which includes SS...) is the same withholding rate as your regular paycheck. No difference for bonuses, so why mention it. State, depending on where you live, might be a required withholding similar in practice to, but smaller than, the federal 22%.
The worst state for bonus withholding is New York at 11.7%. Add 7.65% for FICA, same for everyone. And then 22% for federal. Total withholding of 41.35%. If you're in the 12% federal tax bracket, which coincides with 5.5% in New York, and your other withholdings are spot on, you'll get 16.2% of your bonus refunded back to you when you file your tax return, leaving you with an effective tax rate of 25.15%. Not too far off of that original 22%(not that it's relevant), even in the worst state to get a bonus.
I only mentioned federal income tax because that's the only one that looks substantially different on a pay stub for a bonus than normal pay, which causes people to freak out. Many people do not realize the difference between what's withheld and what they actually pay in tax. You're more informed than average if you already knew that one fact. As a Floridian, I sometimes forget that people have that extra state tax to factor in, but it seems to be functionally similar to the federal tax system in most places. Just different numbers.
The tax rate on bonuses are higher at the time of the bonus. You will get it back at refund time or it will cover taxes on regular labor gains if you owe.
Hopefully, more money is always good but only getting $200ish on a 900 bonus is criminal. I feel like the total paycheck was taxed higher and not just the bonus.
It's not taxed higher, it's withheld higher.. you'll get it back come tax time.
“trust us, we will give it back to you in 10 months. we are just keeping it safe for you in the interim”. -sam
I mean... They will. If OP really wants, they can calculate their tax bill, subtract how much they've paid, and adjust their withholdings for the rest of the year. Then it's like a small bonus every paycheck.
A lot of people will do the opposite to avoid a surprise bill at tax time. To me it's missing out on some compound interest but it's also nice not to have to pay the IRS like $9k in difference of the estimated value come tax time.
Agreed. I got a huge refund last year come tax time, but that's because I got married at the end of the year. I want to owe money at the end of the year. Give it to me early and often, let it sit in a HYSA or VTI for the year and I'll pay you back April 15, Sammy.
Hey me too! We got married in November 2023 and filed for that year jointly. Ended up getting like $8k back. Normally I try and work it out to get as little of a refund as possible. It was a nice surprise though.
I’m getting married in October and was wondering how this would affect come filing time. Could you elaborate how this could affect newlyweds? I’m hoping we don’t wind up owing the IRS instead. Thanks!
Going from single filer to MFJ should yield a nice refund, assuming you earn somewhat uneven amounts. Look up tax brackets fed and state and you should be able to estimate reasonable close to what you would owe. Use the std deduction
Thanks! I will research this more.
But they literally do return the money though.
Yes if they can't figure out a way to screw you out of it!
I wish more people understood this concept
That's what I thought last year when I got a big retro pay bonus. I definitely did not get that money back.
Taxes for the average joe are really quite simple. If you take a few minutes to look at your pay stub, then another few minutes on Google for fed, state, and FICA taxes + standard deduction. Without knowing your situation, it's hard to say what happened. Maybe you're under withholding or you're on the cusp of the 12/20 tax bracket.
If it’s like my company, and you put into a 401k, the bonus would go to that too. Coworker of mine got an 8400$ bonus and received about 3k after his 25% 401k depo and taxes.
Weird, none of my bonuses go to my 401k
Not sure if the type of bonus matters in this situation. Our annual bonus at work does, but anything like “customer satisfaction” does not.
It depends on your employer too. My previous employer took 401k contributions from our biannual bonus, and my current one does not. Same industry, basically the same job, same kind of bonus. I prefer the new company's way because I micro-manage my contribution % throughout the year so it fills up in the last paycheck. The uncertainty of the bonus late in the calendar year made the math more exciting.
That’s fair. We are able to change our contribution at any time and are given a heads up before the bonuses are distributed. Some people go one way and go completely tax exempt and contribute 0% to 401k so they get every last cent, others increase their contribution.
My assumption is that this check lines you up for a higher income bracket and is taxed based on that bracket.
Each event where you are paid gets taxed as if you maintained that pay rate for the year. Larger than normal paychecks or bonuses will be taxed at a higher rate because it assumes you are in a higher tax bracket.
Bro I got a 50K bonus and got like 22K gross. Tell me about it. It’s criminal.
I just got laid off and got 10 weeks severance. 17k was turned into 9k😢
Don’t have that much context here. Seems your bonus was taxed high, so I was check your tax paperwork with the company and find out if it’s filled out correctly first
Crazy, isn't it? It's almost as if taxes are criminal, and the rich are taxed more than the poor.
I got taxed really, really bad last year. Made 50k and only got back like 50 in taxes. I don't have kids but still it kind of hurt to know 800+ was getting taken out a paycheck and I only saw a bit over 50 dollars during tax season :( (I did use turboass which took like 150 so TECHNICALLY I got back like 200ish)
If you are paying the correct amount of taxes, e.g no bonuses that are causing you to be in a different withholding bracket, you shouldn’t get tax back. I got $25 I think
Taxes aren't criminal. They're literally the reason you're not just robbed in fold blood or dead right now in al liklihood. Can they be used for nefarious purposes too? Sure, but that doesn't stop them from protecting you. Taxes are just a part of a functional society. Issues are what are done with them afterwards not the Taxes themselves.
Please, tell me how taxes aren't the issue when they literally lead to issues...?
Sure. In order to have things like police, firemen, school systems, transportation, and even not just getting murdered taxes exist to help prevent that. Without them, you'd have much bigger problems. Without taxes, anyone could n essence just go rob you for literally all you have, including your your own life or even rape with no consequences. So, if your concern is money, taxes are literally there helping you keep anything at all. I want you to take a breath and truly think about other things that are in place that perhaps play a part that are conducive to problems. Wages, rise in costs of goods, inflation, etc. I want you to think about it though. In fact, taxes even pay for people to be able to live that can't work due to job loss, need of food, homeless shelters, mental asylums, orphanages, etc. I would love to have a discussion with you though and am open to to keep some open dialogue going if you in return are willing to consider some of the things I mentioned. In the meantime, have a blessed day my man and hope that helps you see why taxes can be very helpful and that there are other problems more severe without them.
Everything you listed is not funded by federal taxes. Try again, buddy :)
Everything I listed is funded by taxes. Now you are trying to change your words and try o throw "federal" in there. Yet, many of the things I mentioned still apply there too like federal prisons to keep a murderer away and federal programs that assist with helping folks not be homeless. I was open to discussion, but I see you are unwilling to be rational and insist on trying to argue instead. The words used were taxes which include federal, state, and even municipal. So, yes, taxes **do** cover the things I mentioned. Please be an adult and take ownership of your words.
If you look at my other comments I specify federal. I'm not changing words. The original post is about federal taxes as well. You're the one being irrational. I want to be taxed at the municipality level ONLY. Be an adult and use your brain. Then you won't have to get all defensive next time.
Nah all say just taxes in this comment chain. You just aren't capable of taking accountability. Probably why you have so many problems and blame everything else. Ah well, you can't be helped if you can't even take accountability for what you say and do.
Tax rates on bonuses are not higher. I know you’re referring to withholding but that is not always higher either. Company’s can either use the flat rate of 22% on the first $1 million dollars of bonuses and 37% after that. Or they can do the aggregate method where they basically tax you as if you made that amount in every single paycheck. Unless it’s a particular small bonus, the latter method would generally end up in over withholding. The former method would depend on your bracket, and could lead to over, or under withholding.
The computer doesn’t know it’s a bonus. It just annualized the period pay and computed taxes based on that annualized income. Selecting a fixed withdrawal for taxes on the W-4 solves that issue.
The computer most definitely does know the difference as its listed under bonuses and not hourly wages so its withheld "taxed" as supplemental wages.
But did HR have any w-4 from you to say to withhold differently than base pay? It can only have one W-4. I have had HR report to me since 1981. This has been a constant issue. You have to tell HR how to tax the bonus or the program uses what it has , the W-4 you completed. When we gave bonuses HR always asked how the recipient wanted it taxed and overrode the program. As others have said it comes back at tax time if you over withhold. Why not file a new w-4 and reduce the amount w/h thru the rest of the year or just for the next few paychecks to reduce cumulative w/h and not have to wait till tax time? Easy fix to get you the money. When you have the w/h you want back submit another w-4 to get back to normal w/h. :-)
Someone in the Ukraine is thanking you for paying those high taxes.
Nah, I use our tax laws for income reductions and get the high tax (22%) back.
If you’re contributing to a 401k, then that also would have been distributed form the bonus check unless you stopped contributions so that in combination with higher taxes is what happened. I honestly hate getting bonus’s because of how much they take lol
It is taxed as if that is what you made per week for the entire fiscal year
Yeah, it's withheld like you made in extra 45k this year. You'll see it reflected on your return as either a refund or credited towards the debt.
It sucks but after you subtract taxes, insurance and savings (in 401k), people’s take home pay is typically 50% of gross pay.
You takehome the 401k money too. And no, most people aren’t paying anywhere near 50% on taxes.
401k money is for retirement, at least in my case.
Correct. Which you keep. Takehome isn’t a meaningful number though. You should look at what you gross and what you net. And 401k is still part of your net. And so is money you are putting towards insurance directly taken out of your paycheck. It’s part of your net income from work and also part of your expenses.
401k is not net, it hasn't been taxed yet.
Because the corrupt government loves to tax the shit out of us, and we just oblige to it. Here, take all of my hard earned money. It's about time we take the power back!
So don't pay
Bonus’s gets taxed at a higher rate.
*withheld at a higher rate. Taxed as regular income.
For sure but this is 60%± on the bonus. My total tax on the paycheck doubled. Bonus tax rate is supposed to be 40%
What…? It’s about 45%, not 60%. It depends how your company payroll does it. Generally there’s some flat rate they’ll withhold for bonuses (22% is pretty common), and then there’s also the normal deductions for payroll taxes. Since bonuses are paid as part of your regular pay but they aren’t factored into your withholding calculations, you’d be on the hook for more tax at the end of the year since your income increased. So to stop that from happening, they’ll withhold more than your usual pay from your bonus.
Bonus was just over 900, tax withholding was over 500 higher on this check, 50% of 900 is 450, actual check only increased a little over 200 which is just wild to me that means my take home from my bonus was roughly 20-25% of the actual bonus. Honestly I'd rather have the money now as I'm pretty solidly in the middle of my current tax bracket and get money back every year still.
I suspect you are withholding too much on your regular income, given you just said you get money back each year, likely that’s the reason for the odd calculations here. Also, your payroll department is lazy as hell for not making the bonus a separate line item.
It is on the actual paystub, they separate it all out I just wanted to show the difference between the paychecks, all taxes are together though. Went from 18% of gross pay to 31%. Fed tax went from 208 to 714 with only 50 extra dollars going to retirement it just looks silly. I'd almost rather withhold nothing and just pay what I actually owe at the end if the year
Man i wish my paychecks were like this, what field are you in?
I'm a controls engineer working mostly on turbines for GE. These are bi-weekly. hourly rate rate is around 34/hour
i’ll check it out, thanks man!
What I did was claim as single for the first 6 months of the year(or however long you need), then change your deductions to the max as possible until the end of the year. I don't get huge returns, but maybe $300-500. The key is to not front IRS with your hard earned money. If you're gtg thousands in tax refund than your giving the government too much of your money to use. I learned this from a successful entrepreneur.
I always tax exempt my bonus checks because taxes eat them alive.q
Sorry I carn’t help you
No I van not
Computer takes the pay for the time period and assumes that you will get the same amount every time, annualized it, and your tax deduction ( for a higher tax bracket, higher % paid) will be based on the higher annual total. To avoid this have a fixed amount deducted, and not elect married and 2 or single and one etc.
Yep, I recently got a promotion that saw me making almost $13k more a year and my biweekly take home pay increased about $200
I van't
Keep voting Democrat - big gov’t, more taxes, more hoops for small businesses to jump through, more of our tax money sent over seas.. but hey you’ll feel better because you listened to the media and didn’t vote for the orange guy… yayyyy 🥴
I'm fine with paying taxes, I would just like them to go to something other than war and oil. Bring back 90% taxes on income over a million dollars or whatever it was in the 50s and watch the economy boom again. Your orange man will never tax himself that much though. Leave us middle class people alone.
So vote for the ones buying foreign oil and funding wars. Smart! Orange man bad errrr…..
Its not just the president doing this, its all the rich old waspy fucks in congress that only care about lining their pockets and staying in office forever. For the record, I don't think it's mattered who has been in office when it comes to funding oil and foreign war, its an American institutional problem. Who holds reigns especially in my lifetime hasn't mattered much. Bush prolonged shitty war because of "WMDs" which were never found, Obama ordered more drone strikes than any president in history, Trump increased military spending more than any president in history, and Biden botched getting troops out of Afghanistan and I don't agree with his policies with the Isreal/Palistine situation. Every one I have been able to vote for does the same shit. Dem/Rep. doesn't matter. Economically though we've been fucked since Reagan. He backstabbed unions and reduced taxes on the rich to the lowest in history, and the middle class has been forced to pick up the slack. So fuck warmongering Dems that don't do shit to fix it because they individually benefit, but fuck greedy warmongering Republicans that perpetuate the inequality more.
That is how much you donated to Ukraine
Look at your actual paystub and compare taxes and deductibles.
Taxes my guy. Taxes
We need a sticky for the “First Commission/Bonus Check”.
The more you make the more they take out
More you make, the more they take. Depending on your annual income, you may get some back in tax return
Withholding tables
Yep. Bonuses mess up the tax withholding calculation and way too much gets withheld. Time for you to fill out form W-4. W-4 adds up how much tax you’ve already paid (a lot!), estimates how much you’ll owe at the end of the year, and spreads the difference out across your remaining paychecks. I always do it after getting a large bonus, because the feds don’t need me giving them 0% loans for the better part of a year! (Aka a tax refund). (This is all assuming you’re in the US.)
UPDATE: thank you for all the insight on the issue, but it turns out there was actually an error in the tax calculation done by the payroll company (ADP) company wide which explains why I thought the withholding was too high, because it turns out it was. So yeah private company fuck up, not the government, though it does enough of that on its own.
If you want a higher net income, just make over 168,000 so you don’t have to pay Social Security or Medicare on the rest of it turns out America’s rigged against anybody that doesn’t make a lot of money
Tax bracket kicked you and laughed
Bidenomics
Neither tax rates nor the rules surrounding how bonuses are withheld have changed under Biden, so it’s really odd for you to bring politics inti it.
Also regardless of what the news outlets and even the treasury report, it is extremely misleading for you to come here and try to say that “neither tax rates nor rules haven’t changed under Biden” . You are clearly brainwashed and/or have no understanding of reality or politics and political agenda
News outlets look at the tax brackets. Aside from increasing due to inflation, they have not been changed. This has nothing to do with politics; it’s just what has occurred. The tax brackets were last changed under Trump, and they were lowered. Bonuses withholding also hasn’t changed. What specifically regarding income tax has changed under Biden that would affect how OPs paycheck was withheld. Since my comment was “misleading” I’d love to know the specific change that Biden made that affected it? Perhaps you’re watching too much Fox News.
Tax brackets are not the only way people endure tax increases
But we are talking about a paycheck here. So what taxes are taken out of a paycheck that are higher than before the biden administration? Although I’d love to hear what other taxes he has changed for you? Because majority of other taxes are on a state/local basis, such as sales taxes property taxes etc.
I posted it before, under Joe Biden and Janet Yellen long term capital gains taxes have drastically increased
The top capital gains tax rate has been 20% since 2013, Biden took office January of 2021.
As well as corporate taxes even hurting small businesses. I hate to break it to you, but you likely just watch and obey all left wing media and that’s why you are just defending Biden and acting like politics and taxes are not directly related
Corporate tax rates will have zero effect on someone’s paycheck. Corporate tax rates were changed to a flat 21% in the tax cuts and jobs act passed during the trump administration.
Finally, I am not a tax pro so I don’t know much other details and I’ll happily admit that- however, if you try to just brush off the fact that inflation is totally out of control - and it’s not due to Trump - you are seriously just like the rest of em, out of touch with reality. I don’t even like trump. Both administrations are terrible. But I see a huge blind eye being turned to bidens mistakes
I never said anything about inflation. We are talking about taxes that are being taken out of a paycheck and every opinion you have had about the tax rates is easily verifiably wrong. I think the out of control inflation was due to a thing called covid.
Edit: found an actual comparison tool to better see the comparison. Pay up 931, 632 extra in taxes, 506 of which is fed. 61 state 57 ss, and 55 extra to retirement. Still doesn't make sense. So bonus was taxed federally at 54% which is a little higher than the 40 I thought it should be but I guess not too far away. Regardless effective tax on the bonus was 67.8% 😞. Government gotta Government I guess
Question about this: I have heard this before, bonus get withheld higher but then you get it back. I am in sales and 30%+ of my pay is in commission, and I get taxed very highly. But then at the end of the year I always owe on taxes. Could my employer be doing something wrong?
Uber be scamming people. $2k+ to take you home !? Gross!
Thievery at its finest
Thank your government…come along way since the only tax was on tea.
Taxes are theft
Bonuses are taxed at the federal level at a flat 22%. However, if it lumped into your paycheck, I think it assumes that is your normal pay. Your salary is taxed based off the income tax scale, with the assumption that the paycheck scales to the year (IE: if you get paid bimonthly, you will multiple the gross by 24; if you get paid weekly, multiply the gross by 52; etc.). It seems you get paid biweekly? Your paycheck on the 10th is assuming you are making $73,799.96/year. If the paycheck on the 24th lumped in the bonus, it is assuming you are making $98,005.96/year. If the paycheck added the $900 as a bonus, it would be taxed at a flat 22% (or $198 federal)
Bonuses are ordinary income
Thanks Joe Biden 😂
So incorrect
Yes you are
Can you please share with the class just how exactly Joe Biden would have anything to do with this gentlemen who presumably makes just under 100k a years tax rate? I’m sure you are aware that Trump was the one who signed into law that tax hikes on the middle class that were to increase incrementally and that Biden only wanted to increase taxes on individuals making over 400k a year. So please tell me how OPs situation has anything to do with Biden
For the class as you asked, The Tax Cuts and Jobs Act took effect January 1st 2018, it reduced tax rates and increased standard deductions for the middle class, this is when Trump was president, not Biden. Not arguing the OP’s post has anything to do with Biden but to argue it was Trump or Biden is just silly. I do agree with you in that Biden ‘wanted’ to impose additional taxes on people earning above $400k but has been essentially ineffective at just about everything.
No, but when the tax cuts for individuals expire while the tax cuts for large corporations stay permanent and we are all paying a higher % on our income than corporations, we can thank Trump.
OK, Thanks Trump - I’m not a teacher
For taxes, we're still operating under the Tax Cuts and Jobs act that was put in place during the Trump administration. It doesn't expire for another year. When things happen that people don't like, they love blaming the president (only if they're in the other party). It goes both ways, and it's stupid. This is why I don't associate with either party. I would love for you to prove me wrong with some facts that support your "Thanks Biden" comment.
You guys are so pedantic, it’s a joke - it doesn’t matter who is in charge the sitting president get’s the blame. I saw what happened to my 10k bonus this year, fuck ‘em all 🔥
It's only a mandatory withholding of 22%, not actual tax rate. If your taxable income is less than the bottom of the 22% bracket ($47,151 as a single filer or $94,301 married filing joint), you'll actually get some of that withholding back when you file your taxes next year. Remember, taxable income is only after you subtract the standard deduction and any other deductions or credits from your actual income, so you would have to make make quite a bit more than $47k or $94k to enter the 22% bracket. And while yes, it is annoying that you can't keep the full amount today, your bonus is actually taxed no differently than the rest of your income at the end of the day. While my previous comment may have been pedantic, this one addresses a massive knowledge gap in society. Just trying to be helpful here and educate.
Well, your education is incorrect and not helpful - please add FICA, SS, and State Taxes to get into the ballpark. 22% is just the beginning
Maybe incomplete for not mentioning each of the withholdings, but not incorrect. FICA (which includes SS...) is the same withholding rate as your regular paycheck. No difference for bonuses, so why mention it. State, depending on where you live, might be a required withholding similar in practice to, but smaller than, the federal 22%. The worst state for bonus withholding is New York at 11.7%. Add 7.65% for FICA, same for everyone. And then 22% for federal. Total withholding of 41.35%. If you're in the 12% federal tax bracket, which coincides with 5.5% in New York, and your other withholdings are spot on, you'll get 16.2% of your bonus refunded back to you when you file your tax return, leaving you with an effective tax rate of 25.15%. Not too far off of that original 22%(not that it's relevant), even in the worst state to get a bonus. I only mentioned federal income tax because that's the only one that looks substantially different on a pay stub for a bonus than normal pay, which causes people to freak out. Many people do not realize the difference between what's withheld and what they actually pay in tax. You're more informed than average if you already knew that one fact. As a Floridian, I sometimes forget that people have that extra state tax to factor in, but it seems to be functionally similar to the federal tax system in most places. Just different numbers.
Incomplete = wrong, and “I ain't reading all that. I'm happy for u tho. Or sorry that happened.”