My husband recieved a bonus last year that pushed our combined wages to $178,000 compared to $101,000 in 2005.

Question

$32,000 was withheld from the bonus. Do I enter $178,000 as wages and pay taxes on the $70,000 again?

Answer 1

You haven't paid any taxes yet, you have only have money withheld. Their isn't any difference in the tax treatment of bonus payments and regular salary (only a difference in the amount withheld). The amount of wages on your w-2 should include both salary and bonus, as the amount of federal tax withheld on your w-2 will include the withholding on both your salary and bonus.

Answer 2

You should enter whatever is on your husband's W-2 for federal wages. It should include the bonus. You would not pay taxes on the $70,000 again. You would only pay taxes if your tax payments, either federal or state, were less than your tax liability.

Answer 3

You enter the $178K as wages, then include the $32K as withholding. It should show that way on your W-2, so it shouldn't work any differently because it was a bonus than it would have if it had been regular income.

Answer 4

The wages should be $178,000, but you should be able to claim part or all of the $32,000 in the credit side of the tax income. (check the guide). In this way, the $32,000 will be considered in the calculation of your net income.