Supplemental tax rate

[flatbutt]

OK this is admittedly a great problem to have. My unit (at work) achieved above and beyond so we were granted a wage bonus. It was lumped in with our regular pay. And I lost 50% to tax. But my regular tax rate runs (generally) around 28%.

So WTF? Can anyone 'splain?

[masraum]

When you get a higher than normal paycheck they tax the crap out of it. It's always been like that for me.

[masraum]

I think the theory is that if you got enough extra it could put you into a different ballet which would suck come tax time because you would owe big.

[masraum]

This just means that you'll probably get a higher refund or owe less.

[Tervuren]

Yup, when I used to work over time, and had a really big week, the total amount on the check that went to me was quite low compared to the work. A check with 60+ hours of over time I got was quite small compared to what I was thinking it was gonna be, lol.

If the employer is paying his own jump of taxes on that it'd be quite expensive for them to, probably why they don't have me working those hours anymore.

[JJ 911SC]

Originally Posted by flatbutt

OK this is admittedly a great problem to have. My unit (at work) achieved above and beyond so we were granted a wage bonus. It was lumped in with our regular pay. And I lost 50% to tax...

Same thing this week, 5% bonus but only 2.5% in the bank on Friday.

Unfortunately in line with my tas rate

[p911dad]

I'm no tax expert but I do know this: overtime and bonuses are almost always withheld at a higher rate than your regular wage. This is in tax code. At the end of the tax year when you do your annual tax return, the amount overwithheld from this bonus or overtime should come back to you in the form of a refund reflecting the amount overwithheld. It may not be dollar for dollar refunded if your bonus bumps you up into an higher bracket.

[Vipergrün]

my company has a policy that we can optionally select a flat 25% tax on anything above our salary. Not sure what the guidelines or restrictions are.....

[jwasbury]

25% Federal withholding rate on "supplemental payments" add this to state, FICA and Medicare taxes and...yep it will be nearly 50%.

This is pretty much standard for any bonus payment.

[wdfifteen]

I don't do our payroll, but in a similar situation years ago it was explained by our payroll company this way:

Your pay period tax withholding is calculated at a rate that assumes you make that much every pay period of the year. So if you get a bonus that would bump you into the 37% rate if you got it every pay period, they calculate tax withholding at the 37% rate for that period. If at the end of the year your income puts you at, say, the 15% rate, the extra you paid is refunded by the IRS.
That's why we pay all our bonuses at the end of the year. No reason to give Uncle Sam any interest free loans.

[fintstone]

Congratulations...from the PARF posts, I thought everyone had either lost their job or taken huge pay cuts in the private sector this year. When I come to OT, everyone seems to be getting bonuses and raises.

Enjoy your bonus, I am sure you earned it.

[wdfifteen]

Originally Posted by fintstone

Congratulations...from the PARF posts, I thought everyone had either lost their job or taken huge pay cuts in the private sector this year. When I come to OT, everyone seems to be getting bonuses and raises.

Enjoy your bonus, I am sure you earned it.

We're doing quite well this year here, thank you.

[jyl]

Originally Posted by fintstone

Congratulations...from the PARF posts, I thought everyone had either lost their job or taken huge pay cuts in the private sector this year. When I come to OT, everyone seems to be getting bonuses and raises.

I speculate that is one of the factors that determines who participates primarily in PARF vs primarily in OT. Not doing well economically --> angry, dissatisfied --> PARFista.

[flatbutt]

Originally Posted by fintstone

Congratulations...from the PARF posts, I thought everyone had either lost their job or taken huge pay cuts in the private sector this year. When I come to OT, everyone seems to be getting bonuses and raises.

Enjoy your bonus, I am sure you earned it.

Thanks, they don't give them away for just showing up.

[fintstone]

Originally Posted by flatbutt

Thanks, they don't give them away for just showing up.

Do I detect a note of sarcasm?

[gacook]

How big was the bonus (if you don't mind)? I know when I was in the Army, the bonuses I got (10k-ish) were taxed at a 50% rate because they considered it a "gift" somehow, and levied a gift tax on it; or some nonsense like that.