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SVTPerformance's Chain of Restaurants
Road Side Pub
Year end Company bonus tax rate?
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<blockquote data-quote="sleek98" data-source="post: 16079803" data-attributes="member: 144145"><p>I am a cpa and deal with this a lot.</p><p></p><p>Your normal check is withheld at a lower rate because it is over withholding you at the start of the year. Correct in the middle of the year then under withholding you at the end of the year.</p><p></p><p>We have a progressive tax scale. (Making up the dollar amounts in brackets to make the math easier.) Your first 10k is taxed at 10% then the next 20k at 12% the next 50k at 22%. Next 70k at 24% next 50 at 32%.</p><p></p><p>To make your take home pay even they withhold at the effective rate (total tax vs total income) vs the marginal rate (tax on each additional dollar earned)</p><p></p><p>Since the bonus is a one time event they take it at 25% since it’s being added to you marginal rate at the end of the year. If you only make 25k taxable a year they end up way over withholding since your marginal rate will be 12% and you get it back at the end of the year. If you make 200k your bonus ends up under withheld and you owe the difference at the end of the year.</p><p></p><p>25% bonus rate 7.65% fica and 6% Missouri rates. Gets you to 38.65% real quick.</p><p></p><p>It really sucks for people in nyc. It’s closer to 55% after the city tax and higher state tax</p></blockquote><p></p>
[QUOTE="sleek98, post: 16079803, member: 144145"] I am a cpa and deal with this a lot. Your normal check is withheld at a lower rate because it is over withholding you at the start of the year. Correct in the middle of the year then under withholding you at the end of the year. We have a progressive tax scale. (Making up the dollar amounts in brackets to make the math easier.) Your first 10k is taxed at 10% then the next 20k at 12% the next 50k at 22%. Next 70k at 24% next 50 at 32%. To make your take home pay even they withhold at the effective rate (total tax vs total income) vs the marginal rate (tax on each additional dollar earned) Since the bonus is a one time event they take it at 25% since it’s being added to you marginal rate at the end of the year. If you only make 25k taxable a year they end up way over withholding since your marginal rate will be 12% and you get it back at the end of the year. If you make 200k your bonus ends up under withheld and you owe the difference at the end of the year. 25% bonus rate 7.65% fica and 6% Missouri rates. Gets you to 38.65% real quick. It really sucks for people in nyc. It’s closer to 55% after the city tax and higher state tax [/QUOTE]
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SVTPerformance's Chain of Restaurants
Road Side Pub
Year end Company bonus tax rate?
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