Quote:
Originally Posted by Name User
Bonuses are taxed at the rate of 25%. For income above $37k (single filer) that is what it is taxed at anyway. For income below that it's taxed at 15%. So it's possible come tax time you might get a little more back when you file.
Example, you earn $25,000 in wages plus that $20k bonus.
The first $9200 is taxed at 10%, then from $9200-$37,000 it's taxed at 15%. Above that it's taxed at 25%. So you'd only pay the 25% tax on $8000. You'd pay 15% tax on $12,000.
This is all federal. State might be a little different as far as the brackets go.
Not sure why this keeps coming up but I'll try to simplify.
Two words- "withholding" and "taxes"
Taxes are paid based on a percentage of income.
Money is "withheld" each pay check to pay taxes. How much is taken out is determined by how someone files a w-4.
Bonus money may be withheld at a higher rate but it is not taxed at a special bonus tax rate. When you get you w-2s there won't be a box that says 20k "bonus" money. It is included in your taxable income box.