When they give me the lump sum, will it already have taxes taken out? Can I push that money, pre-tax, into an investment to not take a beating on taxes?
2007-05-21 04:38:12 · 4 answers · asked by Scott J 1 in Business & Finance ➔ Taxes ➔ United States
When you get your check see is they took taxes out of it. If not you will have to pay taxes on that income when its tax time again. Any income is supposed to list so the IRS know exactly how much you made.
suro
2007-05-21 04:43:51 · answer #1 · answered by suro25 5 · 0⤊ 0⤋
I assume you are receiving this cash as a bonus, rather than in exchange for vested stock or stock rights. In that case, it will be taxable to you and they should withhold income and FICA taxes. It would be a good idea to run a pro forma income tax return for the year in order to be sure the amount of income tax withheld is correct.
You may be able to reduce your tax burden by contributing all or part of the distribution to a traditional IRA or 401(k) plan (if you haven't already made the maximum deductible contribution for the year). If you will be changing employers, you may be able to deduct your job search and moving expenses.
You should consult a tax advisor or financial planner for additional advice.
2007-05-21 11:46:52 · answer #2 · answered by TaxGuru 4 · 1⤊ 0⤋
If you can do so pre-tax; yes. Otherwise it would be treated just like ordinary income and fica and tax will be withheld on it to cover taxes.
2007-05-21 13:58:48 · answer #3 · answered by acmeraven 7 · 0⤊ 0⤋
You can put it into an IRA, then its locked up until you retire.
Paying taxes is not a bad thing, it means you made income.
2007-05-21 11:42:33 · answer #4 · answered by Joseph T 4 · 1⤊ 0⤋