I am getting a bonus on this next check. It is equal to about 15% of my salary and I can choose what percentage I want taken out for taxes. My first thought was to keep it the same as my paychecks but I am curious as to any potential benefits of doing it at a different rate.
2007-06-19 09:26:02 · 5 answers · asked by seminoledq 1 in Business & Finance ➔ Taxes ➔ United States
The only thing you need to worry about taxes is to make sure you pay either 90% of your tax liability during this year or 100% of your prior year liability (110% if you have over 150k income), whichever is LOWER. If you pass that mark in your withholding, you are immune to the underpayment penalties and interest from the IRS. So actually there is a chance you do not have to withhold anything! The only downside is that you might owe with your tax return =\ but who cares since you have the excess money now that you can invest, and giving the IRS too much does nothing for you because they don't pay interest on your refund.
So to put it simply, you can withholding whatever you desire, there is no rule to make it a certain percentage.
2007-06-19 09:42:05 · answer #1 · answered by Tom C 3 · 1⤊ 1⤋
When you file your return at the end of the year, the bonus amount will just be added to your regular pay and taxed at the same rate. Just be sure you have enough withheld so you don't end up owing a large tax bill.
If you have too much withheld, you'll get it refunded to you, but you'll have given the government an interest-free loan in the meantime.
If you have them just follow the W-4 for withholding, they'll probably take out a higher percentage. The way the W-4 and withholding tables work, withholding is calculated like you made that much every pay period. Yeah, I know..... you wish!
2007-06-19 11:12:39 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
Irregular payments such as bonuses must be withheld at the statutuory rate of 25%. You can elect a higher amount and if your bracket is higher than 25% that would be a good idea.
Without knowing the details of your personal finances and tax situation it's not possible to say if you should have more than the minimum 25% withheld.
2007-06-19 10:05:02 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 0⤋
You could go less, in which case you'd have a few more bucks to spend now, or you could have more taken out, so you'd get a bigger return when you file your income taxes next year. Either way you're still paying the same total amount for taxes. Really the question is, would you rather have more money now or later?
Personally, I'd go more because whenever you get this year's return back, you'll have a larger sum of money that could go into savings. If I had the extra cash now, I'd be more likely to spend it.
2007-06-19 09:49:58 · answer #4 · answered by Silver Spoon 4 · 0⤊ 1⤋
He kept trying to work a deal with the Republicans in congress - to no avail. So, finally, he decided to take his case to the American people - of which about 90% make less than $250,000 per year. --- But some people are not bright enough to realize how much money they make per year and they will still rant against anything Obama proposes.
2016-05-19 23:07:53 · answer #5 · answered by ? 3 · 0⤊ 0⤋