How do you calculate tax on a one time bonus?

Question

Trying to reduce the amount of tax the IRS gets because they take 1/2, and the doesn't seem right. There has got to be another way to calculate the taxes.

Answer 1

Your employer should be withholding whatever amount the tax schedule calls for depending on the amount of the bonus. The large one time amount might put you into a higher tax bracket according to that one time payment, but at the end of the year, you will likely get a refund, as your taxes are figured on whatever tax bracket your entire income falls into. Basically, you'll just have to wait until your tax refund. You may ask them about splitting it up into multiple payments or even changing your W-4 to have a higher number of dependents, then changing it back after your bonus payment.

Answer 2

There are various ways the employer can figure the withholding. But for the actual amount you'll end up paying, it just gets added to your other income, then your tax is figured on the total. The highest bracket is 35% currently, so if they withheld 50%, you'd get the rest refunded unless you owed a lot without figuring in the bonus.