Income Tax vs Bonus taxes ?

[DynoDaddy]

How much more are bonuses taxed than "regular" income?

[Biggest]

They are considered ordinary income and will be treated the same. However if the bonus takes you over the Social Security wage limit, you may have less witholding and consequently a bigger take home check. Sometimes more is witheld on bonuses if they take your tax rate and apply it to the bonus as if you made that much each pay period.

Disclaimer: If you need help with this or any aspect of your game see your PGA professional...

[Makara]

Originally Posted by Biggest

Disclaimer: If you need help with this or any aspect of your game see your PGA professional...

Yeah, Tiger Woods does my taxes.

[turbo50mike]

Originally Posted by Biggest

They are considered ordinary income and will be treated the same. However if the bonus takes you over the Social Security wage limit, you may have less witholding and consequently a bigger take home check. Sometimes more is witheld on bonuses if they take your tax rate and apply it to the bonus as if you made that much each pay period.

Disclaimer: If you need help with this or any aspect of your game see your PGA professional...

Yes, we would usually call ours "distributions" instead of "bonus". Like Biggs said - you can avoid some of the SS, Medicare, and other things that would normally chip away at your net.

[Biggest]

Originally Posted by turbo50mike

Yes, we would usually call ours "distributions" instead of "bonus".

Yes but you can only do that if you can claim some ownership.

[Slow Eddie]

Originally Posted by Biggest

Sometimes more is witheld on bonuses if they take your tax rate and apply it to the bonus as if you made that much each pay period.

Exactly! You would be amazed how many people don't grasp this concept. I argue with my coworkers about this on a regular basis.

For the sake of easy math, lets say you normally are in the 15 percent bracket and the bonus puts you into the 40 percent bracket for that pay period. Come tax time at the end of the year, if you fall into the 15 percent tax bracket you will get 25 percent of the bouns back on your refund.

People swear that once the government takes it you never get it back.

Eddie