I'm due to receive a bonus in July. How can I calculate how much taxes will be taken out?

Question

I'm due to receive a bonus in July. How can I calculate how much taxes will be taken out? I live in california.

I'm using excel, and am keeping a running total of what my bonus will be. How can I show what it will be after taxes??

If the bonus will put me at a little under 50000, then what bracket will I be at?

Answer 1

In terms of a paycheck, they will probably withhold 25% for federal (I'm not in California so I don't know the state amount, but I've seen references to 9.3%). This is a flat amount allowed by the IRS. You will also get hit with 7.65% fica/mc.

The problem though, is that your bonus isn't an isolated event on your tax return. Your bonus is part of your total income. If your tax bracket for additional money is less than 25%, you'll get a bigger refund at tax time; if your tax bracket for additional money is more than 25%, you'll owe.

Get 1040ES from IRS.gov. The 2007 numbers are close enough. Set up your speadsheet like I did with fields for the income items you normally have. Then have a YTD column and a rest-of-year estimate column. Knowing you gross $50K is worthless. You may be in the 15 or the 25% bracket.

Mine is like:
wages
(cafe plan)
(health plan)
(401K)
interest
other income
total
(stnd deduc)
(personal exemption)
taxable income
estimated tax due
total withholding

Then I track it monthly. When I sold stock with a hefty gain, I made a choice--send in an estimated payment or a go bump my W-4 for a while (actually I bumped the W-4 by $300 a pay period until I felt comfortable again).

Answer 2

Without knowing much more information regarding your situation, we can't give you an idea of what tax bracket that you belong. You will either be in the 15% or 25% tax bracket.

You can assume that your bonus will be taxed as supplemental income. Federal tax will be withheld at 25%, Social Security tax will be withheld at 7.65%. I don't know if CA has a provision for supplemental withholding or not. If you can, see if you can get a copy of your pay stub from your last bonus and use that as a guide.

If you get a huge tax refund because of the taxes withheld because of your bonus, then increase the allowances on your W-4 to have less tax withheld during the year.

Answer 3

Part of it depends on the amount you withhold, as per your W-4 form you filled out.
I'm in California, and I regularly receive only 60% of my bonus checks, with the other 40% going to fed and state taxes, and payroll taxes like FICA.

With only my normal pay, my witholdings are pretty accurate to give me only a small refund or small tax bill.

The good news is, they take way too much for the income taxes on the bonuses, and at refund time, I get thousands back.