Discussion:Income tax on sales bonus
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Johnharris (talk|edits) said: | 19 June 2007 |
| My client is in Sales, recently he received a bonus on his check, and noticed he was taxed 25% of his bonus pay. Why? | |
Mtmckeecpa (talk|edits) said: | 19 June 2007 |
| John,
I think the 25% calculation is the flat rate for a supplemental wage, see Circular E, regarding Supplement Wages. | |
Death&Taxes (talk|edits) said: | 19 June 2007 |
| You can read Publication 15 but probably not find the answer! And you do not specify if this is only Federal Income Tax or is all withholding, but assuming the former, it sounds as if the employer had adopted his own hybrid method: take 25% on all bonuses. Even using the Miscellaneous or Daily interim in the publication only produces a 20.4% rate on all wages over $32.
I recall many years ago, many employers would automatically use 20%. When employees would question 'why?' the answer would be 'we are the boss, that's why!' | |
| June 19, 2007 | |
| No worries, it'll all sort out at year end. Just hope it shouldn't have been 28. | |
Johnharris (talk|edits) said: | 19 June 2007 |
| Thanks You guy! I really appreciate the answers | |
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