Originally Posted by
Tacos
The bonus isn't worth it. If I understand correct, $20,000 per year over four years. Bonuses are taxed heavily. You would likely wind up with about 10K per year. Unless you put it into your 401K. In any case, spending 4 years at Pinnacle with no chance of upgrade isn't worth 10K per year. And that's conservative considering they have among they lowest pay rates and yearly caps. Yearly income wouldn't be much more. Not to mention captain pay at a regional with a short upgrade. Just another carrot. No way I'd take the risk of being there for that.
So much misinformation here.
Retention Payment Tax Rumors
There appear to be some rumors regarding the tax implication of the retention payments.
The IRS has rules and regulations that apply to such payments. The income tax withholding rate applied to this type of payment is determined by the federal tax code, which sets the supplemental tax rate at 25%. In addition, states have supplemental income tax rates that apply to payments like these.
The amount of money withheld is an interim step. When each pilot files his tax annual tax return, the pilot’s total income will be taxed at the pilot’s applicable rate, which means that if the pilot’s tax rate is less than 25%, the difference between the 25% rate of withholding and the pilot’s applicable tax rate will be refunded.