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10k signing turns into 6k in the bank. What exactly is the reason for 40%?

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Comments (21)

  • kjl's picture

    Because big bonuses might push you over to the next income bracket, and companies make sure they withhold enough taxes from your bonus to pay the IRS.

    If you're doing your taxes right, you should be getting part of it back come tax time.

  • LAWM's picture

    arent all bonuses taxed at 50% regardless?
    check the tax laws.

  • Password_Is_Taco's picture

    Because being wealthy is evil and paying taxes is patriotic. Someone else who got B's and C's in high school can use that money to buy an iPod. You already have an iPod so obviously it is only fair you give your extra money to those people who don't have them. Obama '08

  • coltsreign's picture

    Signing bonuses are consdiered lump sum payments which means they are withheld at 25% federally. Social Security is another 7.65% and New York State is 7.35%. If NYC tax was withheld it would be another 4%.

  • strato22's picture

    Crap, I had no idea they were taxed at a higher rate. I guess I'll have to revise my apt budget or just keep my fingers crossed the NYC real estate market continues to free-fall through next year.

  • In reply to coltsreign
    WHMD's picture

    got it. thanks!

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  • bkm125's picture

    GordonGecko - hilarious.

  • In reply to Password_Is_Taco
    Spin Control's picture

    GordonGecko:
    Because being wealthy is evil and paying taxes is patriotic. Someone else who got B's and C's in high school can use that money to buy an iPod. You already have an iPod so obviously it is only fair you give your extra money to those people who don't have them. Obama '08

    I'll have to save it.

  • stevenbn's picture

    Because its taxed at an annualized rate. $10,000 when you are paid every two weeks is annualized to $240,000 a year

  • CompBanker's picture

    stevebn, I thought there were more than 48 weeks in a year?

    I wouldn't worry about how much they are going to withhold. At the end of the day you will pay the appropriate taxes and it ends up being a wash. Yeah, it sucks that you withhold more now and get part of it back later, but it usually amounts to only $500-$1,000 or so.

    ~~~~~~~~~~~
    CompBanker

    CompBanker

  • junkbondswap's picture

    I bet you guys can hardly wait to vote for Obama so that your capital gains rate will be as ridiculous as the tax on short term gains/bonuses. I cant wait to buy more lazy ass people ipods for the all the kids they shouldnt be having

  • Brady4MVP's picture

    If you guys think it's bad, wait until Obama becomes president and "spread the wealth around." I still can't believe so many wall street people are supporting Obama and his socialist agenda. We bust our butts off, and Obama wants to take our money and give it away to welfare queens in harlem or south side Chicago who keeps pumping out babies. That's Obama's vision of change. No wonder he's so popular in socialist Europe.

  • stevenbn's picture

    stevebn, I thought there were more than 48 weeks in a year?

    I wouldn't worry about how much they are going to withhold. At the end of the day you will pay the appropriate taxes and it ends up being a wash. Yeah, it sucks that you withhold more now and get part of it back later, but it usually amounts to only $500-$1,000 or so.

    Don't be a smart ass. You got the idea, you get paid 2x a month; which is about every two weeks.

  • ke18sb's picture

    People, if you don't have the correct answer don't respond the the post.

    Bonuses are NOT taxed at a higher rate. Income is income...period, of course with the exception of capital gains. As another posted stated, the reason it's taxed at a higher rate is because it assumes you are in a higher tax bracket (this is probably for simplicity of the HR/Payroll department). When you do your tax return you will list all your income for the year and then will most likely get a tax refund because you overpaid.

    I repeat you are not taxed higher on your bonuses. Everything will work itself out once you do your taxes.

    Think of another example, if you had a summer internship and madd 15K, you were taxed at a rate of 60K, but once you do you tax return you will get the vast majority of your taxes back as you only earned 15k for the year.

  • Clueless Wanderer's picture

    McCain fucked up when he picked Palin to be his VP.

    He should have picked Romney, even though he hates him, or Lieberman, but of course he could not, because that would not go well with the right-wing anti-intellectual Bible-Thumping lunatics that have infected the Republican Party.

    I refuse to put that crazy, dumb bitch Palin anywhere near the Oval Office when McCain, a 72 year old, has a history of cancer

  • Brady4MVP's picture

    i don't like Palin either; personally, i would've loved romney or bloomberg but knew the latter was just a pipe dream.

    nonetheless, i still would rather have Palin as VP than have a radical socialist like obama as my president.

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