It is my understanding that the Federal government has made 25% of any bonus or incentive you receive taxable...has anyone heard about this or know anything more about it?
2007-10-23 03:37:02 · 7 answers · asked by Miss J 2 in Business & Finance ➔ Taxes ➔ United States
That's what is withheld. It isn't necessarily what you actually end up paying. At the end of the year, bonus and incentive pay is lumped in with all of your other income on your W-2, and you calculate your tax based on your total income including any bonus and incentive pay. If you end up owing less than the 25% withheld, because your total income puts you in a lower bracket than that, the extra withheld will be refunded to you when you file your tax return.
2007-10-23 03:57:53 · answer #1 · answered by Judy 7 · 0⤊ 0⤋
The IRS has made a mandatory WITHHOLDING rate of 25% on such bonuses/incentives. That percentage may or may not reflect you actual tax rate, which is determined when you file your tax return for the year in which you receive said bonus.
The mandatory withholding was put into place because some folks spent their entire bonus and then didn't have enough cash available to pay the tax due at filing time.
2007-10-23 04:04:43 · answer #2 · answered by acermill 7 · 0⤊ 0⤋
Tax On Incentive Pay
2017-01-12 05:09:10 · answer #3 · answered by ? 4 · 0⤊ 0⤋
No, bonuses are taxed the same as any other earned income. See IRS publication 17. Just Google Publication 17. See page 270 for the tax calculations. See bonuses in the index. CEOs take 1 million dollar bonuses, because their income is tied to corporate profit.
2016-05-25 02:21:37 · answer #4 · answered by ? 3 · 0⤊ 0⤋
Incentive pay and bonuses are taxable income, so it depends on your tax bracket. You may be referring to the withholding rate.
2007-10-23 03:55:03 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Yes, bonuses are subject to a mandatory 25% withholding rate.
2007-10-23 03:45:22 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Paying taxes sucks don't it?
Any type of income is taxable. Witholding is now being taken out. The only part that is new is the witholding...if you haven't been reporting it...SHAME ON YOU!!!
2007-10-23 03:45:27 · answer #7 · answered by timbers 5 · 0⤊ 0⤋