How are bonuses taxed?
Amateur question as I’ve yet to begin full time. Are bonuses taxed at a higher rate? I thought they were
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Please just search the forum, this has been answered many many times.
Usually tax WITHHOLDINGS on your bonus are higher since payroll assumes it’s a regular paycheck (so it looks like you are making a lot of money). In most cases this is just ordinary income and will be treated as such by the IRS. So what you will actually pay in taxes is whatever the effective tax rate is on your total annual compensation. If that is lower than what was withheld, you’ll get a refund at the end of the year.
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