I am getting a bonus in my next paycheck. What do I change my Allowances to so that Uncle Sam won't take as much out? I currently claim "1" on my W-4.
2007-10-22 14:16:18 · 6 answers · asked by Jenner 2 in Business & Finance ➔ Taxes ➔ United States
You can claim 0, but remember, when tax time comes you will still have to pay the government what is owed. There is no way of hiding the bonus because your job has to report it.
My advice is to keep 1 on your w4 and look for ways to get the maximum back on your tax return.
2007-10-22 14:24:21 · answer #1 · answered by Robere 5 · 0⤊ 3⤋
It doesn't matter what you put on your W-4. Bonuses and other irregular payments are withheld at a statutory rate of 25%. Some states with income taxes also apply a statutory withholding rate on bonuses. When added to the Federal rate and Social Security and Medicare withholdings it's possible to see over 40% of the bonus withheld for taxes.
Sorry, but there is no legal way around this. Even if you were legitimately claiming EXEMPT on your W-4, the bonus would be subject to withholding at the 25% rate. Congress changed the law a few years ago to combat abuses in bonus payments where employees would change their withholding allowances shortly before the bonus was paid and change it back afterwards. This often caused the employee to owe a large tax bill at filing time so the law is as much protecting taxpayers from themselves as it is making sure that the taxes are timely paid.
2007-10-22 23:27:02 · answer #2 · answered by Bostonian In MO 7 · 2⤊ 0⤋
I have a question of my own: What the hell is wrong with everybody?? Hockey is the most exciting sport on the planet, why change anything? I mean, I understand it's just a hypothetical but some of these answers are so disappointing to read. A shot clock? Are you kidding me?? The only changes I would make would be to get rid of the shootout and the trapezoid. I don't understand how people can even compare hockey to the other sports when the other 3 major sports are so friggin boring. If anything, they should be borrowing ideas from us. Just because most Americans don't have the attention span for a sport like hockey does NOT mean there is something wrong with it.
2016-03-13 04:55:53 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Most bonuses are taxed at the highest federal tax rate. You can't annualize a bonus to figure out the tax, so it is simply taxed at the highest rate. You can change your W-4 to retain more from your regular checks though.
2007-10-22 14:20:16 · answer #4 · answered by Anonymous · 1⤊ 0⤋
The IRS considers a bonus to be supplemental wages. The federal tax withholding on supplemental wages is 25%, regardless of what you have on your W-4.
2007-10-22 14:30:50 · answer #5 · answered by Plea_of_insanity 5 · 1⤊ 0⤋
If you claim a higher number; you will withhold less. The higher the number, the more money you will take home.This means the money taken out for taxes will be less. However, if your number is too high, you will end up owing Uncle Sam at the end of the year.
2007-10-22 14:26:16 · answer #6 · answered by some guy 2 · 1⤊ 1⤋
I also want to ask the same question
2016-08-26 03:59:24 · answer #7 · answered by trudi 4 · 0⤊ 0⤋