Bonus check taxes

[newwife03]

What is the name of your state? TX**************.....Is it a set % for your employer to take out taxes on a bonus check? If so what is the %?

 

[racer72]

The exact same as a regular paycheck. It makes no difference to the IRS where the money comes from or the name of it, it's considered taxable income to them.

 

[TinkerBelleLuvr]

Not true ... generally, I've had to take it out at 25% federal tax, regardless of filing status. I depends on whether it is additional bonus in a regular paycheck, or truly a bonus check. If you follow the regular tax tables, you are liable to have too much taken out.

Federal FICA tax (Social Security and Medicare) will be withheld at the required 7.65% rate on all taxable supplemental wages. Federal income tax will be withheld at the IRS required flat 25% supplemental pay tax rate for bonuses, lump sum vacation pay, and other pay that is not routine (weekly/monthly) in nature.

 

[pattytx]

It is up to the employer whether or not to use the supplemental rate for "supplemental wages" and use of the rate is subject to certain requirements. It is always correct for the employer to use the aggregate method for calculation of federal income tax.

But Ginnyj is correct that 25% is the current withholding rate for supplemental wages and it is the employer's option, if the requirements are met. And most employers do tax that way on bonuses and other supplemental wages because it's the most fair across the board, and payroll systems are set up to do it easily.

 

[Ozark_Sophist]

I've had gift tax applied to certain forms of employer incentives.

 

[pattytx]

Ozark, what the heck are you talking about? Gifts are from one individual to another and there is no withholding involved; the tax is imposed on the GIVER the gift, not the RECEIVER of a gift.
http://www.irs.gov/newsroom/article/0,,id=107815,00.html

Employment taxes are withheld from all compensation paid by an employer to an employee as result of the employer-employee relationship.

 

[HomeGuru]

What is the name of your state? TX**************.....Is it a set % for your employer to take out taxes on a bonus check? If so what is the %?

**A: my IRS friend said it should be 100%.

 

[porcelina68]

Most bonus checks are taxed at the supplemental rate, per Federal Regulations.

 

[pattytx]

Again, however, the employer is never required to use that method.

 

[Ozark_Sophist]

Again, however, the employer is never required to use that method.

It was all part of a booboo on the part of the employer which began when they failed to withhold any tax on a series of safety awards leaving them with a tax liability of $1 million. When the error was discovered, corporate simply wanted to withhold the tax due from the paycheck (at one chunk, which would have meant two or three weeks with zero net take home pay for most of the workers).

 

[pattytx]

It was all part of a booboo on the part of the employer which began when they failed to withhold any tax on a series of safety awards leaving them with a tax liability of $1 million. When the error was discovered, corporate simply wanted to withhold the tax due from the paycheck (at one chunk, which would have meant two or three weeks with zero net take home pay for most of the workers).

A $1 million boo-boo?