taxed on bonus BEFORE receiving bonus

[dstty]

I have just received a 'bonus' from my employer. My current paycheck has the TAX deduction for the 'bonus' on it, but not the actual 'bonus'. I will get the actual 'bonus' in 60-90 days. How can this possibly be legal?

What is the name of your state (only U.S. law)? International Company based in the USA.

 

[pattytx]

Have you asked payroll? Are they claiming "constructive receipt"? Is this bonus plan considered a "deferred compensation" plan?

 

[dstty]

Thanks for the advice - but WOW. They referred me to a website on this type of bonus. Of the 89 countires they operate in, 12 are taxed at 'nomination', the rest are taxed at 'redemption'. USA is at 'nomination'. I still think it should be illegal. If it had been a larger bonus, it could have wiped out my entire paycheck.

 

[pattytx]

It still might be illegal. "Nomination" is not an IRS term or concept. The IRS works almost exclusively on a cash basis for employees (just like individuals), unless there is a strictly defined deferred compensation plan for this bonus.

Can you provide the link to the website they referred you to?

 

[dstty]

I'm sorry. I can't do that. But here is a paraphrase of what was said on our notification of the award.

Note: Your participation and rights under this program will be governed solely by the rules established under the (award) program as administered by (company name). This award may be subject to taxation at the time of nomination or redemption per local country tax laws; any applicable taxes will be automatically deducted from your paycheck or reported in your income statement. Please refer to the (award) web site for policy, FAQs and more information.

 

[pattytx]

Ask them if this bonus plan is a nonqualified deferred compensation plan and let me know what they say.

And, in their context, what does "nominated" mean?

Wait just a minute. I know this is an international company, but do you WORK in the U.S.? What state (you're asked to enter that when you start a new thread for a reason)? If you don't, are you a U.S. citizen or resident alien?

We are talking about U.S. taxes, right?

 

[dstty]

Ask them if this bonus plan is a nonqualified deferred compensation plan and let me know what they say.
>>> they won't say - but they've been doing this for years and years.

And, in their context, what does "nominated" mean?
>>> my boss 'nominated' me to receive a bonus.

Wait just a minute. I know this is an international company, but do you WORK in the U.S.? What state (you're asked to enter that when you start a new thread for a reason)? If you don't, are you a U.S. citizen or resident alien?
>>> I live and work in VA, and I was born here.

We are talking about U.S. taxes, right?
>>> yes.

I appreciate your comments, but it appears nothing can be done at this point.

 

[pattytx]

I didn't say that.

Meaning you may not get the bonus at all?