Taxes taken out for bonuses vs. salary...?

Question

Is there a different tax rate for bonuses? If so, how do I find out what it is? Why does the employer have to consider is a "bonus" rather than just cutting another payroll check?

Does this apply to someone who gets paid hourly as well?
How come when I create a bonus check in QuickBooks its the same as a regular paycheck?

Answer 1

Its all just income.

Answer 2

Since withholding on any given check is calculated as if you made that same amount every pay period all year, if you get a check that's your normal paycheck plus a bonus, or even a bonus check by itself that's bigger than your normal paycheck, withholding will be a higher amount and probably even a higher percent. But at the end of the year when you file your return, the bonus amount will be treated just like regular wages, and the tax you pay will depend on your total income and filing status, but won't be higher because there is a bonus involved.

Answer 3

The withholding on a bonus is a flat 25% tax plus FICA plus whatever your state mandates for bonuses. Very high bonuses get taxed at a higher rate. As for your QB problem, I don't know. If you can alter the percentages for one paycheck without messing up the rest of the year, do that.

Answer 4

Bonuses and other "irregular" compensation payments such as stock options, etc. are considered supplemental wages. These are wages that are not paid regularly (on every paycheck). For example, if the employer decides to increase the employee's salary retroactively to an earlier date, the retroactive increase may be treated as supplemental wages and the increase on a go forward basis would be treated as regular salary. Withholding on supplemental wages are withheld at a statutory rate. For US federal taxes, this is withheld at a flat 26%. The state rate for supplemental wages will vary by state (for example, California is 6%). If the employee is in a higher tax bracket (their marginal tax rate is greater than 26%), they will owe additional tax on the bonus when they file their tax return.

Answer 5

Because your tax rate on your W-4 that you filled out was based on your yearly salary. If they give you money above and beyond that salary then it will put you in a different tax bracket. Rather then adjust your tax rate, they call it a bonus and tax you the maximum amount. It is up to you to file a tax return at the end of the year to get the money back. I would be more then happy to explain this further if you would like.

Answer 6

Your use of the word "allowed" is not correct. They are required to withhold the amount that was withheld. They do not have an option. The percent withheld must be based on the ratio of the amount that you earned in a pay period to the length of the pay period. Because you received both a regular paycheck and a bonus check during the same period, they MUST withhold a larger percentage, whether they want to do so or not.

Answer 7

I believe they tax your bonus at the highest possible tax rate ( 39%? not sure ). Up front anyway. When you do your taxes you will get whatever overpayment you made back again in the form of your refund.

Answer 8

much much higher rate for bonus. The government penalizes any American that does a good job in order to give benefits to illegals. And to think - you just voted for the demon-crats that did this. HooRay for you. LOL

Answer 9

Giving bonuses allows the company freedom in how they want to reward performance - they can give it when they want.

Answer 10

DEFINITELY higher. I usually pay around 20% on my checks, but when I got a bonus it was atleast 40%.

Answer 11

I didn't know that a "gift" was taxable.

Don't ask don't tell!

Shhhhhhhhhhhhh

cash the check and don't say anything to anyone!