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

 

Plus the checks are coming on the 20th of April correct? $$$ No matter what the percent, when you do your 2018 taxes you'll get an overage paid as a refund in 2019.

 

It’s 22% according to my accountant.

 

Plus social security and state tax. I imagine it will be a total of 35 to 40% or so when the check clears.

 

That’s correct. By the time you get the loot, state and Uncle Sam taking a huge bite out of it.

 

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.

 

That’s what I was looking for... thank you

 

22% fed
6.2% social security
2% union

 

Yep the union gets their grubby 2%

if Spirit doesn’t use the flat 22% and instead decides to Calculate it with your April 15 or April 30 check, I.e. method b, then it will be withheld at a much higher rate.

For example as a 5 year captain, base pay is 36 x 202.
So gross base pay is $7272. If they add the compensation payment to the April 15 or April 30 check amounts, then the withholding is for a single guy $6278.84 plus 37% of the wages above $20988. Or for a married guy $6724.11 plus 37% of the wages above $25481.

So 37%+6.2%+1.45%= close to 45%. So that’s where your 45% comes from.

I think Spirit will probably calculate it both ways flat 22% and method b and withhold whatever is higher, and I’m also going to wager they are going to use April 30 figures as everyone gets just 36hours on their April 30 check. April 15 everyone makes something totally different From everyone else.

 

Do you read your email? It’s coming April 20th as a separate check at the federal taxes will be 22%

Yes ALPA gets 1.95% but they did negotiate it for you and without them you’d have gotten nothing. A little perspective on the “grubby”