Author Topic: any accountants out there that i can ask a question?  (Read 490493 times)

Offline tzifanya54

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Re: any accountants out there that i can ask a question?
« Reply #1520 on: February 26, 2018, 11:36:02 AM »
Why are taxes on a bonus paycheck so much higher percentage wise than a regular paycheck? Is it because the system now thinks I am earning that much higher wages. In other words let's say I get $100 a paycheck and now I get a bonus for $500, does the system now think I am earning 5X what my previous income was and now will deduct based on a 5X multiple of my salary? If so will that be straightened out come year end?

Offline churnbabychurn

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Re: any accountants out there that i can ask a question?
« Reply #1521 on: February 26, 2018, 11:45:44 AM »
Why are taxes on a bonus paycheck so much higher percentage wise than a regular paycheck? Is it because the system now thinks I am earning that much higher wages. In other words let's say I get $100 a paycheck and now I get a bonus for $500, does the system now think I am earning 5X what my previous income was and now will deduct based on a 5X multiple of my salary? If so will that be straightened out come year end?
Sounds off

Offline AtallD

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Re: any accountants out there that i can ask a question?
« Reply #1522 on: February 26, 2018, 11:52:51 AM »
Why are taxes on a bonus paycheck so much higher percentage wise than a regular paycheck? Is it because the system now thinks I am earning that much higher wages. In other words let's say I get $100 a paycheck and now I get a bonus for $500, does the system now think I am earning 5X what my previous income was and now will deduct based on a 5X multiple of my salary? If so will that be straightened out come year end?

Bonuses (i.e. supplemental income) are subject to higher withholdings (not to be confused with tax rates). The simplest method that most small businesses use to withhold on bonuses is the flat 25% method.

Offline henche

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Re: any accountants out there that i can ask a question?
« Reply #1523 on: February 26, 2018, 12:01:31 PM »
Why are taxes on a bonus paycheck so much higher percentage wise than a regular paycheck? Is it because the system now thinks I am earning that much higher wages. In other words let's say I get $100 a paycheck and now I get a bonus for $500, does the system now think I am earning 5X what my previous income was and now will deduct based on a 5X multiple of my salary? If so will that be straightened out come year end?

It's taxed at your marginal rate, not your average rate.

For example, the federal income tax rate is zero up to 24k (before getting to EITC etc). So if you make 24k, all they're withholding is FICA/FUTA.  Now you make an extra 2k--that will also have federal income tax.

Online ExGingi

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Re: any accountants out there that i can ask a question?
« Reply #1524 on: February 26, 2018, 12:42:01 PM »
Bonuses (i.e. supplemental income) are subject to higher withholdings (not to be confused with tax rates). The simplest method that most small businesses use to withhold on bonuses is the flat 25% method.
Source?

My hunch is that it's a problem with the payroll system being used, or how the bonus is being entered, which might be annualizing the income.

I know of someone who qualified for SSI for a disabled child. However, the mother worked for a school that was often behind on the payroll. Every time the school played catchup, and gave a check (or multiple checks) that were supposed to be paid over an extended period of time, but were now all paid in one month (or one quarter) the SSA annualized the income, resulting in the SSI being withheld, demand for repayment etc. etc. The family didn't understand why this kept on happening, it was just a regular bothersome ritual for them to keep on going to the SSA. Until they came to me for help on another issue, and when I looked at this scenario, I realized what was going on, and suggested that they ask the school to make a special exception (it's ridiculous that this should be the case) and pay this teacher on the same schedule as the goyishe workers (who would never tolerate delayed payments), so that they don't face this hardship.
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Offline AtallD

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Re: any accountants out there that i can ask a question?
« Reply #1525 on: February 26, 2018, 01:17:17 PM »
Source?


See section 7 of Circular E: https://www.irs.gov/pub/irs-pdf/p15.pdf 
flat % changed to 22% in 2018. Previously, this was 25%: https://www.irs.gov/pub/irs-prior/p15--2016.pdf

Offline Berenstein Bear

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Re: any accountants out there that i can ask a question?
« Reply #1526 on: February 26, 2018, 02:04:58 PM »
Do work bonuses need to be on the books legally? Is there anything wrong with requesting that my employer give me bonuses in another form? I like to be straight but not stupid.

Offline Menachem613

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Re: any accountants out there that i can ask a question?
« Reply #1527 on: February 26, 2018, 02:09:30 PM »
Do work bonuses need to be on the books legally? Is there anything wrong with requesting that my employer give me bonuses in another form? I like to be straight but not stupid.

Will you be paying tax on the bonus? I assume you will if you are indeed straight. Remember your parnasa was already set on RH.

Offline Berenstein Bear

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Re: any accountants out there that i can ask a question?
« Reply #1528 on: February 26, 2018, 02:22:09 PM »
That's part of my question.
Are bonuses taxable at any amount? If someone gives me gift cards, do I need to pay taxes on them? Does it make a difference if it's given by an employer?

Offline churnbabychurn

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Re: any accountants out there that i can ask a question?
« Reply #1529 on: February 26, 2018, 02:26:19 PM »
Do work bonuses need to be on the books legally? Is there anything wrong with requesting that my employer give me bonuses in another form? I like to be straight but not stupid.
Yes you have to pay taxes and withholdings and so does the employer

Offline Berenstein Bear

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Re: any accountants out there that i can ask a question?
« Reply #1530 on: February 26, 2018, 02:33:34 PM »
Thanks.

So all those schools that give gc before y"t to their teachers, or businesses that give vgc to their employees before holidays, are not acting legally?

I'm fine with them doing whatever they want, just curious if there is a difference.

Offline churnbabychurn

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Re: any accountants out there that i can ask a question?
« Reply #1531 on: February 26, 2018, 03:05:12 PM »
Thanks.

So all those schools that give gc before y"t to their teachers, or businesses that give vgc to their employees before holidays, are not acting legally?

I'm fine with them doing whatever they want, just curious if there is a difference.
they are not acting legally if they don't withhold the correct taxes. Maybe they do

Offline Jack out of the box

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Re: any accountants out there that i can ask a question?
« Reply #1532 on: February 26, 2018, 05:08:24 PM »
Do work bonuses need to be on the books legally? Is there anything wrong with requesting that my employer give me bonuses in another form? I like to be straight but not stupid.
See IRS Publication 525
Bonuses
https://www.irs.gov/pub/irs-pdf/p525.pdf#-FOWrapper7012
Holiday gifts
https://www.irs.gov/pub/irs-pdf/p525.pdf#-FOWrapper7065

Offline tzifanya54

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Re: any accountants out there that i can ask a question?
« Reply #1533 on: February 26, 2018, 05:30:58 PM »
Source?

My hunch is that it's a problem with the payroll system being used, or how the bonus is being entered, which might be annualizing the income.

I know of someone who qualified for SSI for a disabled child. However, the mother worked for a school that was often behind on the payroll. Every time the school played catchup, and gave a check (or multiple checks) that were supposed to be paid over an extended period of time, but were now all paid in one month (or one quarter) the SSA annualized the income, resulting in the SSI being withheld, demand for repayment etc. etc. The family didn't understand why this kept on happening, it was just a regular bothersome ritual for them to keep on going to the SSA. Until they came to me for help on another issue, and when I looked at this scenario, I realized what was going on, and suggested that they ask the school to make a special exception (it's ridiculous that this should be the case) and pay this teacher on the same schedule as the goyishe workers (who would never tolerate delayed payments), so that they don't face this hardship.
This happened to both mine and my wife's bonus. Hard to believe that both companies have the same messed up system. My main concern though is.... if I do nothing will it automatically straighten itself out when I do my taxes or do I need the companies in question to do something.

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Re: any accountants out there that i can ask a question?
« Reply #1534 on: February 26, 2018, 05:38:25 PM »
This happened to both mine and my wife's bonus. Hard to believe that both companies have the same messed up system. My main concern though is.... if I do nothing will it automatically straighten itself out when I do my taxes or do I need the companies in question to do something.


Well, the question was clearly answered above by @AtallD

See section 7 of Circular E: https://www.irs.gov/pub/irs-pdf/p15.pdf 
flat % changed to 22% in 2018. Previously, this was 25%: https://www.irs.gov/pub/irs-prior/p15--2016.pdf
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Online Dawie

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Re: any accountants out there that i can ask a question?
« Reply #1535 on: February 26, 2018, 05:50:43 PM »
This happened to both mine and my wife's bonus. Hard to believe that both companies have the same messed up system. My main concern though is.... if I do nothing will it automatically straighten itself out when I do my taxes or do I need the companies in question to do something.
you only need to do something if they took out too little
(and even then unless the bonus is YUGE you dont have to worry)

Offline churnbabychurn

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Re: any accountants out there that i can ask a question?
« Reply #1536 on: February 26, 2018, 06:25:57 PM »
This happened to both mine and my wife's bonus. Hard to believe that both companies have the same messed up system. My main concern though is.... if I do nothing will it automatically straighten itself out when I do my taxes or do I need the companies in question to do something.
All income over and under withholdings should straighten out at year end

Offline tzifanya54

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Re: any accountants out there that i can ask a question?
« Reply #1537 on: February 26, 2018, 06:26:46 PM »
you only need to do something if they took out too little
(and even then unless the bonus is YUGE you dont have to worry)
Thanks

Offline A3

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Re: any accountants out there that i can ask a question?
« Reply #1538 on: February 26, 2018, 06:56:20 PM »
Can the company just label it as employee gifts and only take a $25 deduction per employee? How will this affect the employee side.

Offline mahnishma

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Re: any accountants out there that i can ask a question?
« Reply #1539 on: February 28, 2018, 11:08:31 PM »
Can i deduct business cc annual fee as a business expense, if I've used it for Both personal and business?
Tia
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