Community Chat

[Lipstickdiva]

I think it's up to the employer how a bonus check is taxed when they give it to you. My bonus checks and my DH's severance check he rec'd were taxed at 38%!!!!!

[brii]

On 7/24/2014 LipstickDiva said:

I think it's up to the employer how a bonus check is taxed when they give it to you. My bonus checks and my DH's severance check he rec'd were taxed at 38%!!!!!

That's ridiculous...

[Lipstickdiva]

On 7/24/2014 brii said:

On 7/24/2014 LipstickDiva said:

I think it's up to the employer how a bonus check is taxed when they give it to you. My bonus checks and my DH's severance check he rec'd were taxed at 38%!!!!!

That's ridiculous...

I know. I've been told, and I've never looked into it so I don't know how accurate it is, that the employer can tax a bonus/severance at your regular tax rate if they want to. But typically a bonus is taxed at a much higher rate so if they choose to tax it at the bonus rate, you take a huge hit.

When I look at my gross bonus amount compared to my net, it makes me sick.

[Elstongunn]

That's really nice!

Never hurts to consult with someone on how to minimize the tax bite, either!!

[azterry!]

On 7/24/2014 LipstickDiva said:

I think it's up to the employer how a bonus check is taxed when they give it to you. My bonus checks and my DH's severance check he rec'd were taxed at 38%!!!!!

bonus money is taxed at a higher rate than regular salary. My bonuses were always taxed at the 38% rate also.

[------]

That is good news! Congrats!!!

[CouponQueen]

Congratulations!!!

We don't get serverance but when employees retire and they get paid for their vacation time..they change their deductions for that last paycheck..to 9..otherwise it is taxed heavily.

Just about every person I know personally did that..after one employee said she had $12,000 in vacation pay and received about $7400..

[meem120]

Thank you everyone for your well wishes. I'm a half full glass girl and am extremely happy. We will consult with our accountant as to what to do. But this is a wonderful gift regardless of the tax consequences.

[Nuttmeg]

You worked for a very nice boss. The new firm may have different exit packages, and not as generous.

[millieshops]

Bonus money is added to one's overall income. It's that total income, not the amount of the bonus itself, that determines what percentage tax anyone pays. Only OP knows what tax bracket she's in and how much extra she can earn before that bracket changes. I could earn a bonus larger than that great severance bonus OP is getting before my tax bracket would change. That's because I'm near the bottom of a bracket. Hope that's true for her, too.

At any tax, though, she's way ahead in both money and, I'm assuming, a sense of being well appreciated! Great way to go into retirement. Enjoy, McCall.