Tuesday, March 14, 2006

Bonus!

I just found out my bonus came through at even more than my supposed maximum, due to a little kicker thrown in for overall company performance being better than expected. They're giving us an extra 401k contribution because of that too.
So the bonus is almost $10,000, but I'll have to wait to see how much is taken out in taxes. I think they deduct more than usual from bonus checks, though I'm not really sure why that should be, and perhaps I'm wrong about that.
Anyway, this is a relief, as I was afraid I'd get less of a bonus than last year and I will need all the cash I can get for my condo!

10 comments:

Nina Smith said...

That's a windfall. Congrats!

Single Ma said...

Very nice bonus. Congrats!

Uncle Sam does seem to snatch more from bonuses than salary. I always thought it was because they're significantly higher than a regular paycheck. Imagine earning that kind of money every pay period. If you apply the same (withholding) rate, the reduction will be more but it's comparably equal.

mapgirl said...

They say the tax deduction is 50% of the bonus, but that's really only if it bumps you up a tax bracket, which for me it never has. You are lucky that some of it can go to a 401k plan. I've worked at 2 firms where the bonus money contributions were not allowed.

Jonathan said...

Congrats! I miss bonuses...

They take out more for a bonus because it is all taken out at your marginal tax bracket. Your regular paycheck takes into account your estimated deductions and whatnot.

Anonymous said...

I just got a decent bonus check and had the same questions when i realized how much was taken out. I found this link helpful.

www.thestreet.com/funds/taxforum/990258.html

sixpack said...

Your taxes on bonuses are calculated at a supplemental rate which is 25% regardless of your withholding elections. This rate is probably over twice as much as you see on a regular paycheck.

Anonymous said...

They deduct more taxes from bonuses because the bonus amount, when added to your regular salary, usually jumps you into a higher tax bracket.

Apollo said...

Congrats on your bonus. Seems they normally deduct a standard 30% for most bonus check.

Anonymous said...

Go to http://www.paycheckcity.com

You plug in your state, bonus amount, withholding, etc., and it will tell you exactly how much will be taken out in taxes.

That site has proved invaluable to me over the years, and is always accurate to within a dollar or two.

Caitlin said...

congrats on the bonus!!! w00t!