Signing Bonus? - Undegrad first time signing
Hi all,
So I'm an undergrad and this is my first time encountering a signing bonus. My company gave me one and I received half of it as a lump-sum a few months ago (with no taxes removed). Apparently, I'm going to get the other half in my first paycheck. The thing is, I won't start working at this company until after this year's tax time. So for my 2013 taxes, how do I report the bonus, since I'm not working there yet and thus I don't think I can count the bonus as "wages"? Am I going to receive a W2 for this bonus from the company? Do I not pay taxes on this money until April of 2015, at which time I'll actually be working at the company?
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If they do it like many of the other firms, your taxes for the whole thing should be taken out of the other half of your signing bonus. You should be fine.
Bonuses are most assuredly not taxed at a higher rate. Income is income. Amount withheld is not the same as taxes paid.
Wrong. A bonus is considered supplemental income - not regular wages - and is taxed differently. There are two methods, the percentage & the aggregate method. The percentage method is done by taxing the supplemental income by flat rate of 25%. The aggregate method is when the bonus is assigned to your regular paycheck along with earned wages. Meaning the supplemental and regular income will both be taxed resulting in a higher rate because of the combined bonus & wages in the payment.
@"Blinxer" You will receive a w2 for the income received in 2013. Not sure why taxes were not taken out of the first payment, either taxes will be taken out for the entire bonus in the second payment, perhaps taxes were taken out? I am not sure, ask your firm?
@JBone I'll receive a W2 from this company even though I don't work there yet? I haven't signed any contracts or other tax documents with them, except for the sign-on bonus agreement! For some reason that doesn't seem right...I've heard of some people receiving 1099-Misc for their signing bonuses exactly because they got them in the year preceding their starting work at the company.
P.S. I did email my firm but, because of the Christmas holiday, it will be a while before I get a reply. I'm over worrying and can't wait that long xp
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