Company Benefits
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@tim_g said in Company Benefits:
@jaredbusch said in Company Benefits:
@tim_g said in Company Benefits:
@scottalanmiller said in Company Benefits:
Bonuses aren't even a real thing to the IRS, it's literally just part of your pay. At least that's how it has always been where I have gotten bonuses. It's just a paycheck with a larger amount in it that normal, the IRS doesn't have a "this is a bonus" checkbox to even know that it is a bonus to be taxed differently. At the end of the year, your bonus is just part of your pay, it can't be taxed differently because there is nowhere for it to show up.
Yeah I get that, it's all just "income", and you get taxed on it all just the same at the end of the year. And if they take too much, you get more back.
I'm talking about what you get in your pocket then and there.
Not relevant is the point. You still owe taxes based on the total when it is all said and done.
It is relevant when I get paid, because I make sure my deductions are set so that I don't have to pay anything and so I get a little back. I don't need them "shorting" me on a bonus then, to give it back later. I'm already putting money in savings, 401k, etc... I don't need an "extra" holding when I get a bonus.
Only so relevant as you can modify that individual paycheck to not do that. That's at your discretion. The taxes don't change, only the deductions do and those are at your discretion. If you chose to do it differently, you'd see more money coming to you rather than less. But it would all be the same once it switches from deductions to taxes.
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@tim_g said in Company Benefits:
Everything I get back from tax returns just goes into savings anyways... so when I get a bonus, I want it to actually be a bonus. Not a tiny savey save, complements of the government.
That's fine, but that is all how you treat those different paths of the money. It's not the money changing but how you react to it.
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@scottalanmiller said in Company Benefits:
I REALLY dislike bonuses. Those are not a benefit. That's a trojan horse benefit, looks nice on the surface but in reality is just a way to lower employee pay through trickery.
I also don't like bonuses. We have quarterly bonuses here and I would much rather get the total of salary plus bonus, each time I get paid (as an actual salary). On top of that, the bonus is taxed more heavily (initially) in CA, so it is about half the gross each time
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@wrx7m said in Company Benefits:
@scottalanmiller said in Company Benefits:
I REALLY dislike bonuses. Those are not a benefit. That's a trojan horse benefit, looks nice on the surface but in reality is just a way to lower employee pay through trickery.
I also don't like bonuses. We have quarterly bonuses here and I would much rather get the total of salary plus bonus, each time I get paid (as an actual bonus). On top of that, the bonus is taxed more heavily (initially) in CA, so it is about half the gross each time
You can control that to adjust for the tax rate.
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@scottalanmiller said in Company Benefits:
Bonuses aren't even a real thing to the IRS, it's literally just part of your pay. At least that's how it has always been where I have gotten bonuses. It's just a paycheck with a larger amount in it that normal, the IRS doesn't have a "this is a bonus" checkbox to even know that it is a bonus to be taxed differently. At the end of the year, your bonus is just part of your pay, it can't be taxed differently because there is nowhere for it to show up.
It's different in that they have different schedules for the recommended amount for an employer to withold for you (Top Marginal, vs. something arbitrary like 25%),
It's not different at the end of the tax year (as you are talking about) that it gets piled under all under wages, Tips and Other Comp (Box 1).
We are not arguing that they withhold more by default in your state, we are arguing that at the end filing your taxes you would owe the exact same amount of money, and have the same in your bank account no matter if you made 50K base and bonus 50K, or you made 100K base.
Now I will point out that there is variable compensation that a company can give you that has variable tax implications. If I hold onto my RSU's for 1-year past vestment then I'm going to end up paying less (much less!). This is why executives get paid in millions in stock, and maybe only 500K in cash. This is why honestly I'd be OK if I never got another raise and they just kept giving me more large budgets of stock (but hell I'll take both).
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@scottalanmiller said in Company Benefits:
@tim_g said in Company Benefits:
@jaredbusch said in Company Benefits:
@tim_g said in Company Benefits:
@scottalanmiller said in Company Benefits:
Bonuses aren't even a real thing to the IRS, it's literally just part of your pay. At least that's how it has always been where I have gotten bonuses. It's just a paycheck with a larger amount in it that normal, the IRS doesn't have a "this is a bonus" checkbox to even know that it is a bonus to be taxed differently. At the end of the year, your bonus is just part of your pay, it can't be taxed differently because there is nowhere for it to show up.
Yeah I get that, it's all just "income", and you get taxed on it all just the same at the end of the year. And if they take too much, you get more back.
I'm talking about what you get in your pocket then and there.
Not relevant is the point. You still owe taxes based on the total when it is all said and done.
It is relevant when I get paid, because I make sure my deductions are set so that I don't have to pay anything and so I get a little back. I don't need them "shorting" me on a bonus then, to give it back later. I'm already putting money in savings, 401k, etc... I don't need an "extra" holding when I get a bonus.
Only so relevant as you can modify that individual paycheck to not do that. That's at your discretion. The taxes don't change, only the deductions do and those are at your discretion. If you chose to do it differently, you'd see more money coming to you rather than less. But it would all be the same once it switches from deductions to taxes.
Technically you only control the federal taxes withholding. There is variability on the up for Medicare because my joint filing is too high (If you don't drop your tax liability at a point you run the risk of paying a penalty extra rate on my marginal for Medicare) and on the down for social security (I've stopped paying it for the year as I've hit the $7,886.40 maximum the government will withhold for the year). Kinda nice getting a big spike on your paycheck part way through the year.
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@john-nicholson said in Company Benefits:
@scottalanmiller said in Company Benefits:
@tim_g said in Company Benefits:
@jaredbusch said in Company Benefits:
@tim_g said in Company Benefits:
@scottalanmiller said in Company Benefits:
Bonuses aren't even a real thing to the IRS, it's literally just part of your pay. At least that's how it has always been where I have gotten bonuses. It's just a paycheck with a larger amount in it that normal, the IRS doesn't have a "this is a bonus" checkbox to even know that it is a bonus to be taxed differently. At the end of the year, your bonus is just part of your pay, it can't be taxed differently because there is nowhere for it to show up.
Yeah I get that, it's all just "income", and you get taxed on it all just the same at the end of the year. And if they take too much, you get more back.
I'm talking about what you get in your pocket then and there.
Not relevant is the point. You still owe taxes based on the total when it is all said and done.
It is relevant when I get paid, because I make sure my deductions are set so that I don't have to pay anything and so I get a little back. I don't need them "shorting" me on a bonus then, to give it back later. I'm already putting money in savings, 401k, etc... I don't need an "extra" holding when I get a bonus.
Only so relevant as you can modify that individual paycheck to not do that. That's at your discretion. The taxes don't change, only the deductions do and those are at your discretion. If you chose to do it differently, you'd see more money coming to you rather than less. But it would all be the same once it switches from deductions to taxes.
Technically you only control the federal taxes withholding. There is variability on the up for Medicare because my joint filing is too high (If I don't drop my tax liability I run the risk of paying a penalty extra rate on my marginal for Medicare) and on the down for social security (I've stopped paying it for the year as I've hit the $7,886.40 maximum the government will withhold for the year). Kinda nice getting a big spike on your paycheck part way through the year.
Texas. No state taxes
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@scottalanmiller I don't know how anyone puts up with taxes being that high. I did the math on moving to Portland. I could buy a decent Japanese Sedan for the yearly tax liability.
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@john-nicholson said in Company Benefits:
@scottalanmiller said in Company Benefits:
@tim_g said in Company Benefits:
@jaredbusch said in Company Benefits:
@tim_g said in Company Benefits:
@scottalanmiller said in Company Benefits:
Bonuses aren't even a real thing to the IRS, it's literally just part of your pay. At least that's how it has always been where I have gotten bonuses. It's just a paycheck with a larger amount in it that normal, the IRS doesn't have a "this is a bonus" checkbox to even know that it is a bonus to be taxed differently. At the end of the year, your bonus is just part of your pay, it can't be taxed differently because there is nowhere for it to show up.
Yeah I get that, it's all just "income", and you get taxed on it all just the same at the end of the year. And if they take too much, you get more back.
I'm talking about what you get in your pocket then and there.
Not relevant is the point. You still owe taxes based on the total when it is all said and done.
It is relevant when I get paid, because I make sure my deductions are set so that I don't have to pay anything and so I get a little back. I don't need them "shorting" me on a bonus then, to give it back later. I'm already putting money in savings, 401k, etc... I don't need an "extra" holding when I get a bonus.
Only so relevant as you can modify that individual paycheck to not do that. That's at your discretion. The taxes don't change, only the deductions do and those are at your discretion. If you chose to do it differently, you'd see more money coming to you rather than less. But it would all be the same once it switches from deductions to taxes.
Technically you only control the federal taxes withholding. There is variability on the up for Medicare because my joint filing is too high (If you don't drop your tax liability at a point you run the risk of paying a penalty extra rate on my marginal for Medicare) and on the down for social security (I've stopped paying it for the year as I've hit the $7,886.40 maximum the government will withhold for the year). Kinda nice getting a big spike on your paycheck part way through the year.
If you are paying more up front to the government, you are ripping yourself off- Giving them a free loan. No thanks.
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Basically, I need to be paid a California wage but move to a tax-free state. Emphasis on free. I am very close to seeing if my current employer would consider this. I just need an underling first. Then, I would have very few reasons to be onsite.
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@wrx7m said in Company Benefits:
Basically, I need to be paid a California wage but move to a tax-free state. Emphasis on free. I am very close to seeing if my current employer would consider this. I just need an underling first. Then, I would have very few reasons to be onsite.
I had that happen. Wall St wages and moved to dallas.
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@tim_g said in Company Benefits:
@scottalanmiller said in Company Benefits:
Bonuses aren't even a real thing to the IRS, it's literally just part of your pay. At least that's how it has always been where I have gotten bonuses. It's just a paycheck with a larger amount in it that normal, the IRS doesn't have a "this is a bonus" checkbox to even know that it is a bonus to be taxed differently. At the end of the year, your bonus is just part of your pay, it can't be taxed differently because there is nowhere for it to show up.
Yeah I get that, it's all just "income", and you get taxed on it all just the same at the end of the year. And if they take too much, you get more back.
I'm talking about what you get in your pocket then and there.
While I'm all for not giving the IRS an interest-free loan! It helps offset dealing with estimated tax payments (horay, extra quarterly payments!)
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@tim_g If you are consistently getting a large return, you should increase the allowances you claim on a w-4. Keep your money to invest or save and don't give free loans to the government.
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@john-nicholson said in Company Benefits:
@tim_g said in Company Benefits:
@scottalanmiller said in Company Benefits:
Bonuses aren't even a real thing to the IRS, it's literally just part of your pay. At least that's how it has always been where I have gotten bonuses. It's just a paycheck with a larger amount in it that normal, the IRS doesn't have a "this is a bonus" checkbox to even know that it is a bonus to be taxed differently. At the end of the year, your bonus is just part of your pay, it can't be taxed differently because there is nowhere for it to show up.
Yeah I get that, it's all just "income", and you get taxed on it all just the same at the end of the year. And if they take too much, you get more back.
I'm talking about what you get in your pocket then and there.
While I'm all for not giving the IRS an interest-free loan! It helps offset dealing with estimated tax payments (horay, extra quarterly payments!)
Even if you owe them money at the end of the year, at least you had some interest while you had it.
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@wrx7m said in Company Benefits:
@john-nicholson said in Company Benefits:
@scottalanmiller said in Company Benefits:
@tim_g said in Company Benefits:
@jaredbusch said in Company Benefits:
@tim_g said in Company Benefits:
@scottalanmiller said in Company Benefits:
Bonuses aren't even a real thing to the IRS, it's literally just part of your pay. At least that's how it has always been where I have gotten bonuses. It's just a paycheck with a larger amount in it that normal, the IRS doesn't have a "this is a bonus" checkbox to even know that it is a bonus to be taxed differently. At the end of the year, your bonus is just part of your pay, it can't be taxed differently because there is nowhere for it to show up.
Yeah I get that, it's all just "income", and you get taxed on it all just the same at the end of the year. And if they take too much, you get more back.
I'm talking about what you get in your pocket then and there.
Not relevant is the point. You still owe taxes based on the total when it is all said and done.
It is relevant when I get paid, because I make sure my deductions are set so that I don't have to pay anything and so I get a little back. I don't need them "shorting" me on a bonus then, to give it back later. I'm already putting money in savings, 401k, etc... I don't need an "extra" holding when I get a bonus.
Only so relevant as you can modify that individual paycheck to not do that. That's at your discretion. The taxes don't change, only the deductions do and those are at your discretion. If you chose to do it differently, you'd see more money coming to you rather than less. But it would all be the same once it switches from deductions to taxes.
Technically you only control the federal taxes withholding. There is variability on the up for Medicare because my joint filing is too high (If you don't drop your tax liability at a point you run the risk of paying a penalty extra rate on my marginal for Medicare) and on the down for social security (I've stopped paying it for the year as I've hit the $7,886.40 maximum the government will withhold for the year). Kinda nice getting a big spike on your paycheck part way through the year.
If you are paying more up front to the government, you are ripping yourself off- Giving them a free loan. No thanks.
This is true if you don't have income outside of salary. Due to stock compensation, dividends, and other fun things I have to withhold extra/pay quarterly estimated taxes.
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@tim_g said in Company Benefits:
@john-nicholson said in Company Benefits:
@tim_g said in Company Benefits:
@jaredbusch said in Company Benefits:
The owner pays out bonuses to all the employees twice yearly, but it is simply profit sharing.
Basically he keeps cash banked to handle XX months of payroll. Then as long as we have that he pays out the overage as a bonus to us based on full time / part time and how long we been here.
Yeah, and bonuses get taxed like crazy. If you get a 5k bonus, you get less than half of it in your pocket.
I'm not sure if your serious but...
...then I would tell you your wrong, way, way wrong!
about 3.5x more CA and FITW taxes taken out, than on a regular income check that's even more than the bonus.
Calculate the percentages already. I bet that "bonus" check is a lot more than you normally get in a single pay period as well. The only way the percentage is larger is if you hit a higher tax bracket (which is really easy to do.)
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@travisdh1 Yeah, I have had some bonuses go that way
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@travisdh1 said in Company Benefits:
@tim_g said in Company Benefits:
@john-nicholson said in Company Benefits:
@tim_g said in Company Benefits:
@jaredbusch said in Company Benefits:
The owner pays out bonuses to all the employees twice yearly, but it is simply profit sharing.
Basically he keeps cash banked to handle XX months of payroll. Then as long as we have that he pays out the overage as a bonus to us based on full time / part time and how long we been here.
Yeah, and bonuses get taxed like crazy. If you get a 5k bonus, you get less than half of it in your pocket.
I'm not sure if your serious but...
...then I would tell you your wrong, way, way wrong!
about 3.5x more CA and FITW taxes taken out, than on a regular income check that's even more than the bonus.
Calculate the percentages already. I bet that "bonus" check is a lot more than you normally get in a single pay period as well. The only way the percentage is larger is if you hit a higher tax bracket (which is really easy to do.)
It's common to tax it at your marginal rate. Normal income averages all of the brackets over the year for taxes. Because bonuses are not part of this blending they get hit with marginal. Now nothing stops you from adjusting this mix, but it's really HR doing most people a favor.
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^^^^ What he said ^^^^^
@JaredBusch is just making sure the IRS doesn't hold on to funds at 0% interest that are rightfully his
