Is my bonus being overtaxed or is this normal?

[Anonymous]

it's amazing how tax-illiterate so many of you seem to be.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Now you understand how terrible it feels when you are in the top income bracket, half is basically taken from you.

If you're in the top tax bracket -- meaning you effectively gross $500,000 a year -- and feel "terrible" that you pay a higher rate of tax on every dollar after that amount -- you need to be smacked upside the head.

Half is a lot

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Now you understand how terrible it feels when you are in the top income bracket, half is basically taken from you.

If you're in the top tax bracket -- meaning you effectively gross $500,000 a year -- and feel "terrible" that you pay a higher rate of tax on every dollar after that amount -- you need to be smacked upside the head.

Half is a lot

1) It's not half. It's more like 41% all-in, including foregone PEPs and Pease and the extra Medicare tax.
2) It's a marginal rate. The first $500,000 is taxed at considerably lower rates. (I'm talking about GROSS income and using an approximation, as well as assuming a normal set of deductions).
3) Thank God we live in the US, where tax rates are so much lower than elsewhere.

[Anonymous]

Anonymous wrote:it's amazing how tax-illiterate so many of you seem to be.

+1. THe people who don't know the difference between withholding and tax rates slay me.

[Anonymous]

Anonymous wrote:

Anonymous wrote:it's amazing how tax-illiterate so many of you seem to be.

+1. THe people who don't know the difference between withholding and tax rates slay me.

It really is amazing how many people cannot grasp this.

[Anonymous]

It's only going to get worse thanks to Obama.

[Anonymous]

Anonymous wrote:Normal. Keep voting democrat.

+100

[Anonymous]

Anonymous wrote:It's only going to get worse thanks to Obama.

Obama has cut taxes, asswipe. While slashing the deficit. Busy cleaning up Bush's mess.

[Anonymous]

Anonymous wrote:

Anonymous wrote:it's amazing how tax-illiterate so many of you seem to be.

+1. THe people who don't know the difference between withholding and tax rates slay me.

Sorry, it was a matter of semantics to me. A lot is taken out of a lump sum payment up front is what I meant and what is correct.

[Anonymous]

Anonymous wrote:I'm confused. Are bonuses taxed higher than your salary? I thought you just get it back at tax time.

They are ordinary income. Taxed as wages. The amount of withholding is not indicative of how much tax you will pay. Do people really not know this? This is a basic fact that should be taught before anyone is allowed to vote.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:it's amazing how tax-illiterate so many of you seem to be.

+1. THe people who don't know the difference between withholding and tax rates slay me.

Sorry, it was a matter of semantics to me. A lot is taken out of a lump sum payment up front is what I meant and what is correct.

This is not semantics, this is pure ignorance. Dangerous ignorance.

[Anonymous]

Anonymous wrote:This is OP. My bonus appears to have been taxed higher than my salary. I generally receive 57% of my paycheck in net and 43% goes to taxes.

Your bonus has not been tax. Money has been withheld. As your company does not want you to unexpectedly owe taxes and they have no way to know what your tax rate is, they withhold at a higher rate than normal. You control your withholding on your general salary, so they don't worry about it. You will know how much tax you owe when you calculate your taxes.

[Anonymous]

I'm OP and I make $135K annually, not $500K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Bonuses are taxed higher than salary, as is anything that comes in a lump sum such as severance or vacation payout. Thems the breaks.

Correct.

Absolutely incorrect. Taxes at the same amount, but your company may withhold more to protect you from owing in the future.

[Anonymous]

Anonymous wrote:I'm OP and I make $135K annually, not $500K.

Either way, it is marginal.