Cruisers Forum
 


Join CruisersForum Today

Reply
 
Thread Tools Search this Thread Rate Thread Display Modes
Old 19-09-2019, 07:40   #1
Registered User
 
MV Wanderlust's Avatar

Join Date: May 2016
Location: Palmetto, FL
Boat: "Wanderlust" -- 1999 Jefferson Rivanna 52'
Posts: 768
Images: 27
Need someone knowledgeable about taxes

I put this in the Red Tape subforum. Seems appropriate.

Let's say your company is going to pay you a bonus. Company HR says they will be taxing it at 22% for federal income tax but there could be supplemental taxes due. I live in Florida so there are no state taxes.

Turbotax and other sites are saying that bonuses are considered supplemental income and are taxed at 25%. Is that in addition to the regular tax of 22% or in place of? "In addition to" would mean a total tax rate of 47% on the bonus! Some of you are probably rolling your eyes at the stupid question but I've heard of some people being hit with 40% taxes on a bonus.

Thoughts? (Yeah, I know. Worth every penny I'm paying for it. )

John
__________________

__________________
John and Deb Easley
John - USCG 50 ton Master
1999 Jefferson Rivanna 52' CPMY
MV Wanderlust is offline   Reply With Quote
Old 19-09-2019, 11:12   #2
Registered User

Join Date: Mar 2019
Posts: 232
Re: Need someone knowledgeable about taxes

So first off, contact a CPA, don't depend on a jackwagon on the internet for tax advice!
Having said that, this jackwagon will tell you that income is income under the U.S. tax code. There is no separate rate for "bonus" income vs "regular" income. Your marginal tax rate is based on whatever tax bracket you fall into, it's that simple.

Payroll withholding companies are required to withhold the appropriate amount for you so that if you're an average person you won't get hit by an extra big tax bill or refund. This means they are basically taking your anticipated total salary and withhold based on the blended rate you'll see if that's all you earn during the year. Since the tax rate is graduated by income, this blended rate is lower than your marginal rate, which is the rate you pay on each additional dollar you earn on top of what they initially calculated. As a result, when they do withholdings for a bonus, use the 22% rate, because the IRS tells them to because it better approximates your marginal rate. This may or may not be accurate depending on your other income. But in any event you're not paying more taxes because it was a bonus, you may be paying more taxes because the more you make the higher your tax rate on those last dollars earned. And at the end of the day, withholdings aren't taxes, they're an estimate, so your withholding rate isn't your tax rate.
__________________

redneckrob is offline   Reply With Quote
Old 19-09-2019, 18:13   #3
Registered User

Join Date: Aug 2013
Location: Miami Beach
Boat: Catalina C34
Posts: 174
Re: Need someone knowledgeable about taxes

You are confusing withholding with tax.
jkishel is offline   Reply With Quote
Old 23-09-2019, 08:37   #4
Registered User
 
denverd0n's Avatar

Join Date: Jun 2008
Location: Tampa, FL
Posts: 4,450
Images: 6
Re: Need someone knowledgeable about taxes

Quote:
Originally Posted by jkishel View Post
You are confusing withholding with tax.
Exactly. A mistake that a whole lot of people make.


Your company is not "taxing" you. They only withhold money, and forward it to the IRS, so that you will not be required to send the IRS a $10k or $20k check at the end of the year.


What your actual tax rate on the bonus will be is entirely dependent on your total taxable income at the end of the year, which will determine your marginal tax rate.
denverd0n is offline   Reply With Quote
Old 23-09-2019, 09:50   #5
Senior Cruiser
 
skipmac's Avatar

Cruisers Forum Supporter

Join Date: Oct 2007
Location: 29 49.16 N 82 25.82 W
Boat: Pearson 422
Posts: 14,114
Re: Need someone knowledgeable about taxes

I will second all the above, including the recommendation to speak with a tax expert.


That being said, I also live in FL and for 20+ years worked jobs that included an annual bonus at the end of the year based on sales, etc. The bonus income was never differentiated from my monthly salary on W2s or anywhere else and both were included in the same pot of money on my tax returns.
__________________
The water is always bluer on the other side of the ocean.

Sometimes it's necessary to state the obvious for the benefit of the oblivious.

Rust is the poor man's Loctite.
skipmac is offline   Reply With Quote
Old 23-09-2019, 09:54   #6
Registered User

Join Date: Aug 2010
Posts: 1,202
Re: Need someone knowledgeable about taxes

They can Withhold slightly more money on a bonus, just in case the bonus pushes your total income into the next tax bracket. However, the US IRS doesn't tax the bonus at a higher level. Anything withheld beyond your taxes due is returned in your income tax return check.
Shrew is offline   Reply With Quote
Old 23-09-2019, 10:08   #7
Senior Cruiser
 
Cheechako's Avatar

Cruisers Forum Supporter

Join Date: Aug 2006
Location: Skagit City, WA
Posts: 21,658
Re: Need someone knowledgeable about taxes

I have no help on the tax, but when I retired, I asked for the bonus to be paid after the start of the new year. My salary was high while working, so putting it in the new year, my earnings were very low. Just a thought .....if your income is changing.
__________________
"I spent most of my money on Booze, Broads and Boats. The rest I wasted" - Elmore Leonard











Cheechako is offline   Reply With Quote
Old 23-09-2019, 10:34   #8
Registered User

Join Date: Mar 2013
Posts: 1,896
Re: Need someone knowledgeable about taxes

You don't really need a tax expert to know the following:

1) Your bonuse will be taxed at regular income tax rates.

2) The company is withholding at a projected tax rate, so you don't get into trouble next year at tax time.

Other than that, enjoy your bonus.
__________________

letsgetsailing3 is offline   Reply With Quote
Reply

Tags
taxes

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
A Newbie from Oakville Looking to Learn Sailing and Meet Knowledgeable People romandesign Meets & Greets 8 08-01-2014 09:08
Need a F31 Corsair trimaran surveyor or knowledgeable owner Near Niagara Falls, NY ejlindahl Multihull Sailboats 2 02-07-2013 21:37
"... owned by a knowledgeable sailor" sailorboy1 Dollars & Cents 7 28-01-2009 09:54
New in every way and in desperate need of knowledgeable individuals underscore79 Meets & Greets 11 30-10-2008 05:29
Looking for knowledgeable advice! angela Monohull Sailboats 18 20-06-2008 21:27

Advertise Here


Copyright 2002- Social Knowledge, LLC All Rights Reserved.

All times are GMT -7. The time now is 13:47.


Google+
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
Social Knowledge Networks
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
×

ShowCase vBulletin Plugins by Drive Thru Online, Inc.