Finance

How much tax is withheld on your bonus? Mine is about 45%, such BS. 28y/o male, single, us citizen, no mortgage to report, standard deduction.

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This is something seniors at banks should explain better for people who receive first time bonuses (wasn’t clear to me first time around). Essentially, bonuses are withheld at the highest rate and not estimated for what you actually owe like your salary. You should get back the extra amount withheld next year come tax time. IE: Bonus you got for 2018 Year-end will be received in 2019 and part of your 2019 taxes due April 2020. So you’ll get back the extra amounts withheld the next year.

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What's your point though? You have to pay the taxes that are owed on the moneys you earn... That's income taxes! If you're talking about withholding, that's what Uncle Sam takes away at source for bonus etc, based on marginal tax rate... but you only pay what you owe on your all in income come tax time

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All discretionary comp is withheld at marginal rate.. not sure why.. whereas all taxes on regular income are withheld at expected rate based on your W4 information

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You'll get it back in your tax return. Think of it as forced savings.

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Forced savings that pays zero interest...

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Under the new tax law that was passed, we were informed that the law required something like 23% or 25% withholding from bonuses, so that’s what they do. We used to be able to change the amount of the withholding to the minimum (even lower than tax bracket rate) but that went away because of the new law

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smart
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^just ranting that it eats away a lot — nothing more. Im talking about how much the govt deducts from my bonus, not how much I owe. Question though, how come my entire tax deduction on a monthly basis is ~33% but my bonus tax deduction is ~45%? Why is it higher?

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Bonus is taxed at the highest marginal rate as it's considered wages for that period, which puts you in the highest tax bracket

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Depends on whether your payroll department thinks it’s a bi-weekly check or a bonus. Sounds like the former

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