How much should my bonus be taxed?

[nausds]

What is the name of your state (only U.S. law)? Arizona

My job requires me to travel full time, I live in Arizona and work for a company based in NJ.

I just received a $5000 bonus, I have checked a few websites with calculators which all show I should net about $3300. Other places have shown that it first gets taxed federal 25%, then medicare/social security 6.5% and then state tax.

I do not trust anyone at my company to tax the correct amount, they were taking out NJ state taxes for 6 months before I noticed and then it was a fight just to get them to take out AZ state taxes instead.

So my question is....how much should I net from my $5000 bonus?

Thanks!!

 

[cyjeff]

Your bonus should be taxed at the same rate as the rest of your income.

I realize this is not a straight answer, but if, for instance, you achieved a higher tax bracket due to this bonus and/or were no longer on the hook for certain taxes, it should be taken into account.

 

[irsos]

What is the name of your state (only U.S. law)? Arizona

My job requires me to travel full time, I live in Arizona and work for a company based in NJ.

I just received a $5000 bonus, I have checked a few websites with calculators which all show I should net about $3300. Other places have shown that it first gets taxed federal 25%, then medicare/social security 6.5% and then state tax.

I do not trust anyone at my company to tax the correct amount, they were taking out NJ state taxes for 6 months before I noticed and then it was a fight just to get them to take out AZ state taxes instead.

So my question is....how much should I net from my $5000 bonus?

Thanks!!

Your company does not determine how much you should be taxed. All they do is calculate withholding based on the exemptions set on your W-4. Problems occur with bonuses since they make it appear that your income for a given pay period is much higher than your actual income and thus you tend to be overwithheld on those checks. The good news is, you get any excess back when you file your return.

 

[thedoctorisin]

Why Are Bonuses So Heavily Taxed? - SavingAdvice.com Blog

 

[LdiJ]

Your company does not determine how much you should be taxed. All they do is calculate withholding based on the exemptions set on your W-4. Problems occur with bonuses since they make it appear that your income for a given pay period is much higher than your actual income and thus you tend to be overwithheld on those checks. The good news is, you get any excess back when you file your return.

Or if you are savy enough to calculate out your tax liability for the year, you can adjust your withholding to compensate for your bonus.

I earn 2/3rds of my yearly income in the first 3 1/2 months of the year. I claim the number of exemptions that will give me the correct overall result for the year. I also adjust it after I receive my bonus at the end of the tax season, if it needs to be adjusted.

 

[irsos]

Or if you are savy enough to calculate out your tax liability for the year, you can adjust your withholding to compensate for your bonus.

I earn 2/3rds of my yearly income in the first 3 1/2 months of the year. I claim the number of exemptions that will give me the correct overall result for the year. I also adjust it after I receive my bonus at the end of the tax season, if it needs to be adjusted.

I do not think it is a good idea to suggest to taxpayers that they mess with their withholding during the year. You may not think you did - but you did.

 

[LdiJ]

I do not think it is a good idea to suggest to taxpayers that they mess with their withholding during the year. You may not think you did - but you did.

You are right...

Proviso: Unless you are 100% certain that you understand exactly what you are doing, messing with your withholding could cause you to owe a serious amount of tax at the end of the year. Do not do it without professional advice.