For work I will be receiving an an approx 30k bonus. My thought is I should contribute a portion to my 401k lower the taxes but how would I calculate? Last year I recvd the same amount and took home just less than 19k.

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(30k-401k contribution)*(.71+(1-state withholding rate))=take home.

likesmart

Thank you.

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Not really sure what you are asking. How would you calculate what?

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Bonuses are tough. For me personally, my tax amount has always been higher than my salary marginal tax bracket. I would say, if you put in 5 leaving 25k to taxes....expect 16-17k after taxes

For the millionth time, bonuses are not taxed differently from normal income

smart

Why would you change your contributions for your bonus to lower taxes if you knew it's the same as any other paycheck? Why mention the take home from last year's bonus if op knew that it gets trued up in March when they file taxes...

You may want to consult a financial fiduciary, I’m not really sure either but best bet might be to find someone very knowledgeable.

I don't understand the purpose of this question. Fund your 401k if you want to. I would put it all to 401k and whatever is left to other retirement accounts.

Isn't there a maximum contribution limit for 401k contribution set by IRS? I think it's around 23k this year includes employer match. Maybe invest in IRA as well which can be claimed in the tax return next year.

https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000#:~:text=Highlights%20of%20changes%20for%202024,to%20%247%2C000%2C%20up%20from%20%246%2C500.

Edit: as someone else pointed out, it does not include employer match. I agree, just checked.

Does not include employer match.

smartlike

If you are eligible for a Roth, you should max out that amount as the dollars come out post-tax, but the profits you make are tax-free. So if you put, say $7500 into a Roth and invest it in something like VOO, QQQ or some other ETF that yields 10% average per year and just let it sit for 10,15,20 years, you will have a ton of money that you can withdraw tax free.

What does this have to do with their question?

funny

More taxes are withheld from bonuses than from paychecks; that's why the check last year seemed small. But at the end of the day, a bonus is still taxed the same as any regular income, and you get the difference back in your refund.

No. I assume OP was withheld at 22 plus state tax plus ss and Medicare and 401k

Taxes are tough, because you not only have to think about Gross Income - 401k contributions, but all other deductions to figure out your Modified Adjusted Gross Income (MAGI) to figure out how much of your bonus will get you to the next tax bracket.

I'd personally look for a tax calculator to get the most accurate answer

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