Next year I will be starting my first job out of college as an IB Analyst, and I have recently realized that IB bonuses are not taxed at the normal withholding rate for supplemental wages of 22%. Most of the information I have found on this topic says that bonuses tend to get taxed at about 50%.
Im hoping someone can expand a little bit on this for me. If bonuses get taxed at 50% how much of that can you get back on tax returns as a 1st year analyst? I know that depends on several factors, so I am hoping someone can elaborate.
It is taxed that much on the front end but you get much of it back on your tax return. You end up paying the same tax percentage on all of your earnings, at least until you get deferred comp.
It's all W2 income and it gets taxed according to the same brackets as your salary.
The rules for the withholdings are a bit more complicated: https://turbotax.intuit.com/tax-tips/jobs-and-career/what-is-the-federa…
How tf do prospective bankers and finance majors not know these things?
Textbook finance knowledge vs personal financial literacy are very different things
It’s so fucking basic, even on a personal finance level, and finance major retards are throwing monkey shit because they know they’re retarded for being so clueless.
One of the most commonly repeated misconceptions… all salary, wages, bonuses, commissions, etc. get taxed the same as ordinary income. Withholding is different, which is annoying, but it’s all the same to you come April
Can you not work with HR to make sure you only get withheld what is actually owed in taxes? Heard this was possible and recommended so as to not give interest-free loans to the government.
I believe someone else explained this better but it was along the lines of this.
If you get a 50k bonus it looks like (to the government) you’re receiving a 50k paycheck, so they think you’re getting 50k per paycheck which annualizes to >$1m in income putting you at the highest state and federal tax bracket for your bonus, which amounts to approx 49-50%?
I believe this is how it works, but again I’m repeating what someone else said so more input would be great
right on the money in my experience
Can confirm. In a Trade Ops role at a Fintech firm and recently received a $50K cash bonus, it hit my bank account to the tune of ~$27K. I do think my withholdings are a bit conservative though as I generally receive a pretty large tax return.
My firm structures our bonus payouts so that we only get hit with the 22% upfront, most firms don't do this though.
Can you elaborate on this?
It’s basically a DTA bro
Corporis omnis ea nostrum quo. Dignissimos qui ipsam repellat dignissimos eos.
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