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Taxes on Bonus

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  • creditcardfree
    replied
    Unfortunately, the military has a hard time meeting recruiting goals and has decided bonuses are what helps them meet those goals.

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  • Beppington
    replied
    Originally posted by creditcardfree View Post
    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!
    I was being sarcastic.

    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 ...

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  • creditcardfree
    replied
    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!

    Leave a comment:


  • Beppington
    replied
    Originally posted by creditcardfree View Post
    OP's bonus is from the military. His state exempts military wages from taxation. This is not the case with most states.
    How do you get a bonus from the military? Did the military make enough money last year that they had some left over?

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  • creditcardfree
    replied
    Originally posted by Beppington View Post
    Is this a bonus from the military?
    OP's bonus is from the military. His state exempts military wages from taxation. This is not the case with most states.

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  • Beppington
    replied
    Originally posted by swanson719 View Post
    We're military exempt on state taxes ...
    Is this a bonus from the military?

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  • swanson719
    replied
    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.

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  • MonkeyMama
    replied
    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.

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  • creditcardfree
    replied
    I'd talk to the finance office on post. Let us know if you can get it changed. I personally will be surprised.

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  • swanson719
    replied
    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?

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  • creditcardfree
    replied
    Bonus payments always have a high withholding rate. I agree with the action plan of moneybags.

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  • moneybags
    replied
    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.

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  • Radiance
    replied
    I think Bonus is income so it is taxable.
    My employer gives bonus post-tax so I only receive what I get to keep.

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  • swanson719
    started a topic Taxes on Bonus

    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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