Sorry, IDK what I was trying to say above, but it was wrong. Yes, monthly fluctuations in pay can make the monthly taxes go up and down, and is sort of a projection of annual pay.
If one is paid a bonus as part of a regular salary, yes, you may pay more taxes annually. It has been my experience that most companies pay bonuses as a separate entitlement, meaning it is withheld at 25% at the federal level, thereby not affecting monthly taxes on ones salary.
Thanks for keeping me straight!
Originally Posted by
Bellanca
They look at the federal withholding tables, and withhold taxes per the table.
The table is inherently based on a projection of income. For most normal salaried jobs, people have a fixed income... little to no variance from paycheck, so the tables are based around that. If you take some unpaid leave and have a $300 paycheck and then the next month pick up over time and get a bonus/profit sharing, etc, and have a $6000 paycheck you will notice the percentage withheld is vastly different. A huge bonus will be overwithheld because they will withhold based on the table that would be commensurate with a much higher income than what you are actually making. Small variances work themselves out, but large bonuses are so over-withheld that they will yield a refund when you file taxes at the end of the year.