Taxes on bonuses

[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.

Tax expert here. Actually, "withholding tax" is very much a thing. It's not the same as taxes owed, but it's a statutory rate. See https://www.irs.gov/newsroom/for-small-business-week-backup-withholding-rate-now-24-percent-bonuses-22-percent-workers-urged-to-do-a-paycheck-checkup

It's also a feature in many international tax treaties.

[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.

Yes, I would. Although the quarterly deadline for Q1 is April 15. So maybe wait until then.

[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.

Yes, I would. Although the quarterly deadline for Q1 is April 15. So maybe wait until then.

You can submit a quarterly payment but I would adjust my paycheck withholding higher instead. As long as you meet the safe harbor amount by the end of the year you won’t have any penalty. Use the IRS tool to estimate your taxes due and adjust accordingly.

[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.

Yes, I would. Although the quarterly deadline for Q1 is April 15. So maybe wait until then.

We did this for 2022. My DH received a bonus at the end of the year. His employer REMOVED 22% to give to the IRS and another 5(ish) percent to give to the state. We did some fancy math involving wage income, unearned income, deductions, etc. and of course, what we had already paid in taxes. We did this for Fed and State and wrote one large check to the IRS and one smaller check to the state.

[Anonymous]

Anonymous wrote:

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.

Yes, I would. Although the quarterly deadline for Q1 is April 15. So maybe wait until then.

We did this for 2022. My DH received a bonus at the end of the year. His employer REMOVED 22% to give to the IRS and another 5(ish) percent to give to the state. We did some fancy math involving wage income, unearned income, deductions, etc. and of course, what we had already paid in taxes. We did this for Fed and State and wrote one large check to the IRS and one smaller check to the state.

Did you do all this fancy math because you weren’t going to meet the safe harbor amount?

[Anonymous]

Anonymous wrote: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.

Can't believe it took 3 pages and finally an accountant chiming in for someone to answer OP correctly and clearly.