I received my bonus this week. While the federal government withholds supplemental income (read: bonus) at a somewhat reasonable rate of 22% (assuming your bonus is separate from your normal paycheck), NY state withholds at a rate of 9.62% which is HIGHER than the highest marginal tax rate (8.82%). NY City withholds at a rate of 4.25%... again higher than the highest rate of 3.87%.
This means that every single person receiving supplemental income in NY will overpay the State and/or city every single year. It is a forced interest-free loan.
You could always move to Hoboken...
You know what sucks too? Living in NJ but working in the city and paying, NJ, NY and Federal taxes. Bunch of scum bags.
Huh? NJ and NY have a reciprocal tax agreement. You don't pay the taxes twice.
Really??? I did, wtf. I gotta look into it. Thanks for the heads up.
I really appreciate this info, about to make a move there shortly. Great heads up!
Glad it was helpful!
Or you could just adjust your allowances...
Allowances wouldn’t apply here - this is the default withholding rate for supplemental income. I do suppose I could add an exemption to offset my regular pay and then change it once the excess supplement pay has been recouped.
lol, if that's true, then just adjust your regular income... Unless your bonus is like 10 times your regular income, it shouldn't be a problem.
Do you even lift?
Tell your payroll person how much you want withheld for Federal, State and Local taxes ... I don't think there is any law that stipulates the amount that MUST be withheld, but there is a guideline that says how is recommended to be withheld. Word of caution though, if you don't have enough withheld, the various governments will charge you underpayment penalties at the end of the year. I always have 25% federal and 6.85% NY state withheld from my bonus (by telling my payroll person how much to withhold) - my payroll person has never said this is against the law to do so.
Thanks, I will do this. Note that it’s only an issue for supplemental pay; my regular pay is taxed normally.
IBD folks with high bonuses - do you get a lot of money back at tax time?
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