this year irs took 40% out of my christmas bonus and i was furious..still am. Last year it was just 4%..why?
2007-12-21 14:52:47 · 5 answers · asked by flamboyant 1 in Business & Finance ➔ Taxes ➔ United States
Remember this is withholding. Your actual tax rate depends on your total income for the year. If you are in the 15% bracket instead of 25%, you'll get a refund. If you are in the 33% bracket (I doubt it), you'll owe money.
25% is a normal amount on bonuses.
2007-12-21 15:07:18 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Someone screwed up last year, pure and simple! Bonuses and other irregular payments are withheld at a statutory rate of 25%, plus FICA (SS + Med) and state taxes. Depending upon your state's rate, it could easily hit 40%. If your employer only withheld 4% last year he probably got jammed pretty hard by the IRS since that doesn't even cover the 7.65% for the FICA.
On balance, the bonus is taxed as part of your wages and will be included on your W-2 along with whatever was withheld. If too much was taken out, you'll get it when you file your return.
2007-12-21 23:34:55 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Somebody probably screwed up last year.
Bonuses are considered supplemental income and are usually taxed at a flat 25% plus state income tax and social security tax.
2007-12-21 23:04:41 · answer #3 · answered by Steve 6 · 2⤊ 0⤋
You can avoid them by moving to a different country.
Try Europe there the money value is twice what it is here anyway.
2007-12-21 23:00:29 · answer #4 · answered by solay26 2 · 0⤊ 1⤋
The questions is what are your withholdings settings set at? Talk to your human resource person.
2007-12-21 23:00:29 · answer #5 · answered by F T 5 · 1⤊ 1⤋