NYC Bonus Tax
Did taxes get raised in NYC???? Why the fuck did I only see 42.5% of my bonus? What the hell justifies 57% tax. Bullshit.
Edit: Never mind, it was an accounting error from my company. We're good now :) Always check your pay stubs people!
You get overtaxed when it hits your bank account, but you get some of it back when you file taxes
Some might go to your 401k too
Would echo check your 401k. At my last firm the bonus in bank account was ~10k too low only for me to realize they put whatever % contribution I had on a monthly basis regularly and applied it to bonus as well...
Turns out it wasn't that. It was an accounting error, phew...
The federal rate on bonuses is higher than your normal withholding rate as well.
edit to add: whomever hit me with MS is absolutely 100% wrong- and a bit of a coward to not engage and share their opposing response. Understand the federal tax code and how it works- bonuses are specifically covered and withheld at a higher rate.
Witholding rate may be higher
Tax rate is the exact same
That is exactly what I said.
I believe federal only withholds at a different level for bonus after total comp exceeds $1mm, and that withholding is mandated to be at top fed bracket. Below that - the firm or individual can choose withholding rate.
There are 2 withholding rates for bonus/supplemental income- one for total comp greater than $1MM and one for total comp less than $1MM. Less than $1MM withholds bonuses/supplemental income at a straight 22% for federal the last time I looked.
Don't sweat you will get like 20-35/57% back depending on how big the bonus was.
How are people in IB for more than a year and not understand bonus withholdings
I mean its not crazy to argue that there shouldn't be any withholdings because you are missing an opportunity to put that money to work prior to paying off your tax bill. Every day the government holds your money you're losing value.
I agree and its especially annoying that there isn't a way to change the withholding on the bonus amount in particular since we know its going too withhold to much. I'm talking more to the point that a lot of people seem to think there's actually a different "bonus tax" and that bonuses get taxed higher than base salary.
There actually is (depending on your normal withholding). The IRS considers bonuses “supplemental income” and has a higher withholding rate. Know the IRS code (or Google at least) before telling people who are giving correct info they are wrong.
number 7 here on the IRS code:
https://www.irs.gov/publications/p15
or here is a more simplified article about it:
https://www.nerdwallet.com/article/taxes/bonus-tax-rate-how-are-bonuses…
Thanks for the MS - I'm saying the bonus is withheld at a higher rate because it is assumed to be a recurring payment but is not taxed any differently at the end of the day because its all ordinary income.
From your own source, supplemental income is combined with regular wage and withheld off that amount - obviously that specific pay period will be exceptionally high and withheld higher but the bonus is not itself taxed at a different, higher percent. I don't know any bank that withholds at the flat 22% mentioned in 1A.
"b. If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages and withhold federal income tax as if the total were a single payment for a regular payroll period."
The government doesn’t withhold your money, your firm does. Just change your withholdings
Turns out it was an accounting error from our firm. I do understand bonus witholdings, but compared to my last year bonus, which was the same amount pre-tax, I was short by like $20k. Glad I checked...
i had withholdings setup for 1 and got taxed a lot and somehow still owe ~$1k to IRS??? Does anyone know why this might be, i was expecting a somewhat nice return but not this
No one will know without being able to see your tax docs.
You expect to be able to make accurate models but can’t figure out what your correct taxes should be (assuming no complicated tax situations)
My yearly budget has a tax calc built in along with an estimated bonus, and for 2022 I was only off by about 100 on my return because of some investment losses I harvested and forgot to account for.
If you think owing 1k is incorrect, then redo your taxes yourself. If it’s correct, then you were under withheld
you just wrote this big ass unhelpful comment to flex how organized you are
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