Why are signing bonuses taxed at 40%?

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.

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

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

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%.

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.

got it. thanks!

GordonGecko - hilarious.

I'll have to save it.

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

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.

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CompBanker

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

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.

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.

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.

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

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.

Withholding income for taxes is such a crock of shit. If the government is going to require this, we should at least get 5% interest on that money for opportunity cost.

- increase the number of allowances on your w-4. it adds up. most people dont realize that withholdings can be adjusted depending on claimed allowances. allowances reduce the amount of federal taxes withheld from your paycheck. each one is worth ~$3,500 in annualized 1040 deductions. technically, the number you choose should depend on itemized deductions and dependents, but i managed to get mine up to 3 without breaking a sweat. just make sure payroll doesnt have you in at 0. thats max.

also generally speaking...dont forget that its better to owe uncle sam money at the end of the tax year than vice versa. i.e, why give the government a interest free loan when you can claim one for yourself? dont get overzealous tho, if you owe over a certain amount in relation to your income, unc will charge you interest. doesnt work in reverse tho. aint that some ish.

- and the other thing: make sure whatever discretionary deductions you have on your paycheck (401k, etc) are adjusted down, temporarily frozen or canceled a few weeks before your bonus hits. the only thing worse than 40 being reserved for uncle sam on the spot, is expecting a certain number after that only to realize it got redistributed into other places that you cant touch. doh!

What deductions did you put in?

mo money mo problems

Obama wants to create a "bonus tax rate" and make it 80%. What kind of devil worshiper would accept his full signing bonus anyway?