Taxes on bonuses

[Anonymous]

Let me try to explain more clearly:

At the end of the year, after you have filed and paid/been refunded what you owe, you will have paid the same amount of tax whether you earned a wage of 200k all in salary or a wage of 100k plus a 100k bonus. In that sense, bonuses are not taxed at any higher or lower rate than your other wage income.

However, depending on how the company treats the payment and your income, the withholding tax may be at a higher or lower rate than the rest of your earned income. But this is just a temporary issue until your taxes are filed.

[Anonymous]

Anonymous wrote:Let me try to explain more clearly:

At the end of the year, after you have filed and paid/been refunded what you owe, you will have paid the same amount of tax whether you earned a wage of 200k all in salary or a wage of 100k plus a 100k bonus. In that sense, bonuses are not taxed at any higher or lower rate than your other wage income.

However, depending on how the company treats the payment and your income, the withholding tax may be at a higher or lower rate than the rest of your earned income. But this is just a temporary issue until your taxes are filed.

Aargh. Many people have provided clear explanations, but you seem intent on confusing the issue.

First, as for, "In that sense, bonuses are not taxed at any higher or lower rate than your other wage income." The implication is that there is some sense in which bonuses are taxed at a different rate than other income. That's wrong. Bonuses are ordinary income, and are taxed at the same rate as other ordinary income. There is no nuance here.

Second, there is no "withholding tax." That's not a thing, much like fetch. There are amounts that are withheld, and sometimes a greater percentage of income can be withheld than other times, based on a variety of factors. But "withholding tax" suggests that this is something that it's not.

You keep trying and screwing up. Just take the L.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Let me try to explain more clearly:

At the end of the year, after you have filed and paid/been refunded what you owe, you will have paid the same amount of tax whether you earned a wage of 200k all in salary or a wage of 100k plus a 100k bonus. In that sense, bonuses are not taxed at any higher or lower rate than your other wage income.

However, depending on how the company treats the payment and your income, the withholding tax may be at a higher or lower rate than the rest of your earned income. But this is just a temporary issue until your taxes are filed.

Aargh. Many people have provided clear explanations, but you seem intent on confusing the issue.

First, as for, "In that sense, bonuses are not taxed at any higher or lower rate than your other wage income." The implication is that there is some sense in which bonuses are taxed at a different rate than other income. That's wrong. Bonuses are ordinary income, and are taxed at the same rate as other ordinary income. There is no nuance here.

Second, there is no "withholding tax." That's not a thing, much like fetch. There are amounts that are withheld, and sometimes a greater percentage of income can be withheld than other times, based on a variety of factors. But "withholding tax" suggests that this is something that it's not.

You keep trying and screwing up. Just take the L.

Wait, I actually liked the PP's explanation...thought it was very clear. You are getting hung up on semantics. Withholding tax. Tax withholding. Call it what you want, but people are not as stupid as you think. They know that's not a tax on top of the annual income tax.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let me try to explain more clearly:

At the end of the year, after you have filed and paid/been refunded what you owe, you will have paid the same amount of tax whether you earned a wage of 200k all in salary or a wage of 100k plus a 100k bonus. In that sense, bonuses are not taxed at any higher or lower rate than your other wage income.

However, depending on how the company treats the payment and your income, the withholding tax may be at a higher or lower rate than the rest of your earned income. But this is just a temporary issue until your taxes are filed.

Aargh. Many people have provided clear explanations, but you seem intent on confusing the issue.

First, as for, "In that sense, bonuses are not taxed at any higher or lower rate than your other wage income." The implication is that there is some sense in which bonuses are taxed at a different rate than other income. That's wrong. Bonuses are ordinary income, and are taxed at the same rate as other ordinary income. There is no nuance here.

Second, there is no "withholding tax." That's not a thing, much like fetch. There are amounts that are withheld, and sometimes a greater percentage of income can be withheld than other times, based on a variety of factors. But "withholding tax" suggests that this is something that it's not.

You keep trying and screwing up. Just take the L.

Wait, I actually liked the PP's explanation...thought it was very clear. You are getting hung up on semantics. Withholding tax. Tax withholding. Call it what you want, but people are not as stupid as you think. They know that's not a tax on top of the annual income tax.

I think people are exactly as stupid as I think they are. In fact, looking through this thread and others, I may be giving them far more credit than they are worth.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Let me try to explain more clearly:

At the end of the year, after you have filed and paid/been refunded what you owe, you will have paid the same amount of tax whether you earned a wage of 200k all in salary or a wage of 100k plus a 100k bonus. In that sense, bonuses are not taxed at any higher or lower rate than your other wage income.

However, depending on how the company treats the payment and your income, the withholding tax may be at a higher or lower rate than the rest of your earned income. But this is just a temporary issue until your taxes are filed.

Aargh. Many people have provided clear explanations, but you seem intent on confusing the issue.

First, as for, "In that sense, bonuses are not taxed at any higher or lower rate than your other wage income." The implication is that there is some sense in which bonuses are taxed at a different rate than other income. That's wrong. Bonuses are ordinary income, and are taxed at the same rate as other ordinary income. There is no nuance here.

Second, there is no "withholding tax." That's not a thing, much like fetch. There are amounts that are withheld, and sometimes a greater percentage of income can be withheld than other times, based on a variety of factors. But "withholding tax" suggests that this is something that it's not.

You keep trying and screwing up. Just take the L.

No need to be so unpleasant.

"In that sense, bonuses are not taxed at any higher or lower rate than your other wage income." The implication is that there is some sense in which bonuses are taxed at a different rate than other income. That's wrong. Bonuses are ordinary income, and are taxed at the same rate as other ordinary income. There is no nuance here.

The nuance is that you pay different marginal rates on different amounts. so everything is not taxed at the same rate. But I think the point that you pay the same tax on the same amount whether bonus or salary is made very clearly.

Withholding tax is just semantics as pp said.

Please try to work on being a nicer person.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Let me try to explain more clearly:

At the end of the year, after you have filed and paid/been refunded what you owe, you will have paid the same amount of tax whether you earned a wage of 200k all in salary or a wage of 100k plus a 100k bonus. In that sense, bonuses are not taxed at any higher or lower rate than your other wage income.

However, depending on how the company treats the payment and your income, the withholding tax may be at a higher or lower rate than the rest of your earned income. But this is just a temporary issue until your taxes are filed.

Aargh. Many people have provided clear explanations, but you seem intent on confusing the issue.

First, as for, "In that sense, bonuses are not taxed at any higher or lower rate than your other wage income." The implication is that there is some sense in which bonuses are taxed at a different rate than other income. That's wrong. Bonuses are ordinary income, and are taxed at the same rate as other ordinary income. There is no nuance here.

Second, there is no "withholding tax." That's not a thing, much like fetch. There are amounts that are withheld, and sometimes a greater percentage of income can be withheld than other times, based on a variety of factors. But "withholding tax" suggests that this is something that it's not.

You keep trying and screwing up. Just take the L.

If you want to get into the technical legal details, there actually is a withholding tax. That is how it is described in the IRC and it is a tax on the employer, and the employee then gets a credit for it against their income tax. See 26 USC 3401 et seq and 26 USC 31.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let me try to explain more clearly:

At the end of the year, after you have filed and paid/been refunded what you owe, you will have paid the same amount of tax whether you earned a wage of 200k all in salary or a wage of 100k plus a 100k bonus. In that sense, bonuses are not taxed at any higher or lower rate than your other wage income.

However, depending on how the company treats the payment and your income, the withholding tax may be at a higher or lower rate than the rest of your earned income. But this is just a temporary issue until your taxes are filed.

Aargh. Many people have provided clear explanations, but you seem intent on confusing the issue.

First, as for, "In that sense, bonuses are not taxed at any higher or lower rate than your other wage income." The implication is that there is some sense in which bonuses are taxed at a different rate than other income. That's wrong. Bonuses are ordinary income, and are taxed at the same rate as other ordinary income. There is no nuance here.

Second, there is no "withholding tax." That's not a thing, much like fetch. There are amounts that are withheld, and sometimes a greater percentage of income can be withheld than other times, based on a variety of factors. But "withholding tax" suggests that this is something that it's not.

You keep trying and screwing up. Just take the L.

If you want to get into the technical legal details, there actually is a withholding tax. That is how it is described in the IRC and it is a tax on the employer, and the employee then gets a credit for it against their income tax. See 26 USC 3401 et seq and 26 USC 31.

I hope you are a different poster, bravo on directing us to the US code.

IANAL but I don’t see where it says “withholding tax” or “tax on the employer” in that USC.

[Anonymous]

Question: I just received a $100k bonus withheld at 22%. Can I go ahead right now and submit an estimated payment to the IRS online which matches my tax bracket of 37%? I would rather avoid the taxes later when I file for 2023.

[Anonymous]

Anonymous wrote:Question: I just received a $100k bonus withheld at 22%. Can I go ahead right now and submit an estimated payment to the IRS online which matches my tax bracket of 37%? I would rather avoid the taxes later when I file for 2023.

Nothing stopping you from doing that, but you will likely end up paying too much and then get a refund. While your bracket may be 37%, that's certainly not your effective rate. I also get my bonus at the beginning of the year. Once I get it, then I can predict pretty closely how much I'll earn for the year. I make a quick estimate of what I'll owe in tax for the full year, and then adjust my regular paycheck withholding to compensate for underwithholding on the bonus.

[Anonymous]

Anonymous wrote:Bonuses are not taxed at a higher rate. They are taxed the same as any other W2 income. The withholding may be higher or may be lower that the regular salary, but that has nothing at all to do with the amount of the tax. Why does this myth continue to persist?

That is 10000% NOT TRUE.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Bonuses are not taxed at a higher rate. They are taxed the same as any other W2 income. The withholding may be higher or may be lower that the regular salary, but that has nothing at all to do with the amount of the tax. Why does this myth continue to persist?

That is 10000% NOT TRUE.

It is 1000000000% TRUE.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Question: I just received a $100k bonus withheld at 22%. Can I go ahead right now and submit an estimated payment to the IRS online which matches my tax bracket of 37%? I would rather avoid the taxes later when I file for 2023.

Nothing stopping you from doing that, but you will likely end up paying too much and then get a refund. While your bracket may be 37%, that's certainly not your effective rate. I also get my bonus at the beginning of the year. Once I get it, then I can predict pretty closely how much I'll earn for the year. I make a quick estimate of what I'll owe in tax for the full year, and then adjust my regular paycheck withholding to compensate for underwithholding on the bonus.

You can, but make sure the income is not attributable to 2022.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let me try to explain more clearly:

At the end of the year, after you have filed and paid/been refunded what you owe, you will have paid the same amount of tax whether you earned a wage of 200k all in salary or a wage of 100k plus a 100k bonus. In that sense, bonuses are not taxed at any higher or lower rate than your other wage income.

However, depending on how the company treats the payment and your income, the withholding tax may be at a higher or lower rate than the rest of your earned income. But this is just a temporary issue until your taxes are filed.

Aargh. Many people have provided clear explanations, but you seem intent on confusing the issue.

First, as for, "In that sense, bonuses are not taxed at any higher or lower rate than your other wage income." The implication is that there is some sense in which bonuses are taxed at a different rate than other income. That's wrong. Bonuses are ordinary income, and are taxed at the same rate as other ordinary income. There is no nuance here.

Second, there is no "withholding tax." That's not a thing, much like fetch. There are amounts that are withheld, and sometimes a greater percentage of income can be withheld than other times, based on a variety of factors. But "withholding tax" suggests that this is something that it's not.

You keep trying and screwing up. Just take the L.

No need to be so unpleasant.

"In that sense, bonuses are not taxed at any higher or lower rate than your other wage income." The implication is that there is some sense in which bonuses are taxed at a different rate than other income. That's wrong. Bonuses are ordinary income, and are taxed at the same rate as other ordinary income. There is no nuance here.

The nuance is that you pay different marginal rates on different amounts. so everything is not taxed at the same rate. But I think the point that you pay the same tax on the same amount whether bonus or salary is made very clearly.

Withholding tax is just semantics as pp said.

Please try to work on being a nicer person.

If you think anything about your repeated attempts to explain a simple concept is clear, I'm not really sure what to say. Other PPs have explained it clearly; you have not.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let me try to explain more clearly:

At the end of the year, after you have filed and paid/been refunded what you owe, you will have paid the same amount of tax whether you earned a wage of 200k all in salary or a wage of 100k plus a 100k bonus. In that sense, bonuses are not taxed at any higher or lower rate than your other wage income.

However, depending on how the company treats the payment and your income, the withholding tax may be at a higher or lower rate than the rest of your earned income. But this is just a temporary issue until your taxes are filed.

Aargh. Many people have provided clear explanations, but you seem intent on confusing the issue.

First, as for, "In that sense, bonuses are not taxed at any higher or lower rate than your other wage income." The implication is that there is some sense in which bonuses are taxed at a different rate than other income. That's wrong. Bonuses are ordinary income, and are taxed at the same rate as other ordinary income. There is no nuance here.

Second, there is no "withholding tax." That's not a thing, much like fetch. There are amounts that are withheld, and sometimes a greater percentage of income can be withheld than other times, based on a variety of factors. But "withholding tax" suggests that this is something that it's not.

You keep trying and screwing up. Just take the L.

Wait, I actually liked the PP's explanation...thought it was very clear. You are getting hung up on semantics. Withholding tax. Tax withholding. Call it what you want, but people are not as stupid as you think. They know that's not a tax on top of the annual income tax.

Agree. PP’s explanation was actually clear and you end up at the same place as the 2nd PP (but without the circuitous verbiage! )

[Anonymous]

As an accountant I always love when people who don't know what they are talking about spew non sense about taxes. Other people have said it already, but bonuses are WITHHELD at a higher rate not TAXED at a higher rate. The words have 2 different meanings. Come tax time the IRS treats regular income and bonuses as ordinary W2 income and is taxed at the same rate.