2006-06-30 09:50:15 · 3 answers · asked by Emily G O 1 in Business & Finance ➔ Taxes ➔ United States
No. They are a form of ordinary income and would either be reported on a W-2 or 1099.
2006-06-30 10:00:36 · answer #1 · answered by Thrasher 5 · 0⤊ 0⤋
They are taxed as any other ordinary income. Bonuses aren't actually "taxed" at a higher rate, they are just subject to a higher withholding rate. They are still lumped together with all your other income when it comes time to file your return and you are taxed based on your total income. The logic behind the higher withholding is probably that bonuses aren't taken into account when calculating withholding that comes out of your paycheck. Therefore, they have the potential to bump you into a higher tax bracket without a corresponding withholding adjustment. This increased withholding tries to insure that you do not end up owing money (and possibly underpayment penalties and interest) at the end of the year.
2006-06-30 17:16:05 · answer #2 · answered by Tax Man 2 · 0⤊ 0⤋
I concur with the last advice given. They are taxed as ordinary income on a W-2 or 1099 misc.
2006-06-30 17:07:00 · answer #3 · answered by Shelby B 3 · 0⤊ 0⤋