Originally Posted by
nkbux
Anyone actually have any definitive info as to what the actual tax rate will be on this incentive money. I’ve heard as low 22% and as high as 45 depending on who you talk to and what day
Your actual tax rate will depend on your total taxable income when you file your taxes for 2018 in 2019.
What the company withholds depends on how they are going to treat the compensation payment.
It’s covered in supplemental wages section of IRS Pub 15
https://www.irs.gov/pub/irs-pdf/p15.pdf
They can either withhold the flat 22% or lump it with your normal wages and calculate the withholding as if they paid you with your normal paycheck which depends on what your filing status is and the number of personal allowances you claimed on your w-4.
In addition to the federal income tax withholding Spirit still has to withhold 6.2% for Social security for the first $128400 you make (after you make $128400 spirit stops withholding social security) and 1.45% for Medicare (no limit). After you make more than $200,000 you are subject to an additional Medicare tax of 0.9%.
Whether the flat 22% is enough withholding, if your tax rate for 2018 is less than 22% then you’ll probably get some of the FITW refunded. If your tax rate is higher than 22% you probably won’t.