Wondering about tax difference between qualifying money earned as income versus bonus. Bonuses get hit hard for tax purposes without an opportunity to get it back at the end of the year. Wondering if it is better to receive all money as income verus a bonus.
2006-07-09 14:13:18 · 2 answers · asked by curiouscp 1 in Business & Finance ➔ Taxes ➔ United States
Bonuses are considered ordinary income. They are taxed at your marginal tax rate.
If taxes are withheld -- and they are subject to withholding in most cases -- both the bonus and the withholding will be included on your W-2 for the year and you WILL settle up at the end of the year. Not sure where you got the idea that that won't happen!
2006-07-09 15:55:32 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
Federal tax rate is 25%. You will get a larger refund (or pay less) at the end of the year when filing your tax return if your actual tax rate is less than 25%. It's gets treated the same as regular wages.
2006-07-09 21:21:56 · answer #2 · answered by Oliver1010 3 · 0⤊ 0⤋