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Taxes on Bonus
Is there a way to change your with-holdings so that bonus's won't be taxed? Over half of my taxes each year come out of my bonus. Feel like I get robbed blind each April - they take 31% of it just to give it all back the next spring.
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I think Bonus is income so it is taxable.
My employer gives bonus post-tax so I only receive what I get to keep. -
Your company is required to withhold 25% for federal taxes. If you are getting a big refund every year, change your W-4 to have less withheld throughout the year. It won't change what you take home on your bonus payment, but you can take home more on your regular checks.Comment
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Bonus payments always have a high withholding rate. I agree with the action plan of moneybags.My other blog is Your Organized Friend.Comment
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I changed our with-holdings so that we don't pay any federal or state taxes. We're military exempt on state taxes, and our tax liability for 2009 was $13 after deductions and exemptions. When the making work pay and retirement matching credits were added in, we had a return bigger than what we paid in in taxes. The tax code doesn't change between this year and next in any way that will effect us. So for my bonus to be taxed means that I lose $620 for 10 months. And I can't adjust something so that my bonus isn't taxed?Comment
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I'd talk to the finance office on post. Let us know if you can get it changed. I personally will be surprised.My other blog is Your Organized Friend.Comment
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You can't claim exempt from taxes, entirely, unless your tax liability was $0 prior year AND expected to be $0 this year.
It appears with the tax credits, this is the case for you. Thus, your bonus should be exempt from withholding. I would talk to the finance office as well - could just be a payroll software oversight.
For the rest of us, if we know we are getting a bonus, just lower your withholding the rest of the year - that is what I do.Comment
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I claimed exempt, but when I spoke with finance I found there is a statutory tax of 25% in addition to all other federal taxes levied on lump sum bonus payments. Which means even with claiming exempt, I still give the gov't a $500 interest free loan for 8 months. I guess it's worth it since with the tax credits we still come out with more than if we had invested it.Comment
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OP's bonus is from the military. His state exempts military wages from taxation. This is not the case with most states.Originally posted by Beppington View PostMy other blog is Your Organized Friend.Comment
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How do you get a bonus from the military? Did the military make enough money last year that they had some left over?Originally posted by creditcardfree View PostComment
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Bonuses for military are for reenlistment or sometimes for an initial sign up. In otherwords they are a recruiting tool. The military doesn't make money...its the government!My other blog is Your Organized Friend.Comment
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I was being sarcastic.Originally posted by creditcardfree View Post
Reminded me of the FDA executives giving themselves million dollar bonuses: FDA Execs Reap Lavish Bonuses - CBS Evening News - CBS News
So apparently the FDA thought their "profits" were high enough that they could afford to give some of the money away in the form of bonuses ... to themselves of course. What kind of mindset must a whole group of these "executives" have to think that was OK?? They just assume it must be OK until someone with enough power comes along and says no it's not. They should not have needed to "get caught", by the media or whoever, to know this was wrong.
I'm sorry, but to me, people who choose to work for the govt should never ever get a bonus ... because as you said, the govt doesn't make money, its the govt! What would the justification be???
Man this is irritating ...Comment
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Unfortunately, the military has a hard time meeting recruiting goals and has decided bonuses are what helps them meet those goals.My other blog is Your Organized Friend.Comment
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