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Bonuses and Taxes

So, they are giving us a Group Performance Award because we reached a financial goal corporate wide (making 15 million more than budgeted). Last year, our GPA was a $250 MasterCard gift card which didn't have to be taxed. They highly publicized that if we met our goal this year, it would be $500. We generally get it in February. This year, they announced that we did so incredibly well that we're getting $625 and we're getting it THIS WEEK! This led to much celebration all around the office last week when they announced it. The reason for the increase was that they are giving it to us in check form and have to take taxes out. So, I just looked up my check online (cool feature we have) even though it hasn't arrived yet. The grand total $388.75 :( I realize I'll get some of those taxes back in February, but, I was thinking it would be at least $450. Apparently, they used a standard 25% Federal rate instead of basing it on your claimed exemptions (sigh).

I'm still excited to get anything extra, but it took a little of the air out of my sails to see how much they took in taxes.

Anybody else getting a bonus?

Dee

Re: Bonuses and Taxes

Quote:

Originally posted by AGDee
So, they are giving us a Group Performance Award because we reached a financial goal corporate wide (making 15 million more than budgeted). Last year, our GPA was a $250 MasterCard gift card which didn't have to be taxed. They highly publicized that if we met our goal this year, it would be $500. We generally get it in February. This year, they announced that we did so incredibly well that we're getting $625 and we're getting it THIS WEEK! This led to much celebration all around the office last week when they announced it. The reason for the increase was that they are giving it to us in check form and have to take taxes out. So, I just looked up my check online (cool feature we have) even though it hasn't arrived yet. The grand total $388.75 :( I realize I'll get some of those taxes back in February, but, I was thinking it would be at least $450. Apparently, they used a standard 25% Federal rate instead of basing it on your claimed exemptions (sigh).

I'm still excited to get anything extra, but it took a little of the air out of my sails to see how much they took in taxes.

Anybody else getting a bonus?

Dee

It is better for the employer to give it to you in the form of a bonus because it saves them taxes I believe.

There is little to protect your bonus from the tax monster. You do however have the option of setting how many dependents you have to take out more or less in taxes at the time of the bonus and also if you can max out 401K deductions on it, it's helpful.

-Rudey
--I get a June/July bonus

I just got mine...the boss was cool and took out the minimal possible for taxes making our bonus as big as it could be. i was impressed.