Community Chat

[MaggieToo]

Thank you for the update. Great news. Congratulations.

[Luv2Decorate]

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 right. 38%

[terrier3]

On 7/25/2014 Luv2Decorate 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 right. 38%

But then when you file your taxes next year, it is adjusted down to whatever tax bracket you fall into, after your usual deductions.

[terrier3]

On 7/24/2014 azterry! 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%!!!!!

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

38% pay may been withheld from the bonus check...but when you file your tax return, it's treated as regular income and taxed the same as everything else.

Who cares if she is in a higher tax bracket for one year? She made a lot more money too.

I was in commission sales for 30 years and now have my own consulting firm. I WANT to make more money...no matter what the tax bite is - I STILL have more money in my pocket at the end of the day!

If I ever made a million dollars in a year (yeah, right!) I would be thrilled to hire an accountant to help me get all the deductions legally available to me - then I would write a big THANK YOU, USA on the check to the IRS!!!!

BTW - Our tax system is progressive - if you are bumped into a new higher bracket, you only pay that higher % on the money that falls into THAT bracket, not on your entire annual salary.

Example - A man makes $9.000 one year - taxed at 10%...he then makes $25,000 the next year. He isn't taxed 15% on the WHOLE amount the next year, just the portion that is over the next bracket - he is taxed 15% on $15,000 worth of the whole annual salary.

I have heard people (who don't know tax law) say they will never make more that X amount, because they don't want to move into another tax bracket. They are assuming (incorrectly) that their ENTIRE income is taxed at the higher rate. A woman I worked with (commission sales) used to literally STOP selling if she thought she was moving into a different tax bracket. I asked her to go to H&R Block and ask an advisor how it works. BOY was she surprised. Not only was she cheating our employer out of income from increased sales, She was holding her career back because she didn't want to share an extra penny with the TAXMAN!