Income taxes for sign-on bonus
I just joined a new company, and I'm in the US. As my first paycheck, I got my sign-on bonus and regular bi-weekly salary both in the same paycheck, summed together.
Does it make any difference in my income taxes eventually, compared to when I was getting them separately? Any pros/cons from taxing purposes?
I'm in illinois and I got only around %66 of the whole money.
united-states income-tax withholding income-tax-refund bonus
edited Dec 7 at 19:14
Chris W. Rea
26.4k1586174
asked Dec 7 at 17:05
Tina J
1414
add a comment |
I just joined a new company, and I'm in the US. As my first paycheck, I got my sign-on bonus and regular bi-weekly salary both in the same paycheck, summed together.
Does it make any difference in my income taxes eventually, compared to when I was getting them separately? Any pros/cons from taxing purposes?
I'm in illinois and I got only around %66 of the whole money.
united-states income-tax withholding income-tax-refund bonus
edited Dec 7 at 19:14
Chris W. Rea
26.4k1586174
asked Dec 7 at 17:05
Tina J
1414
add a comment |
I just joined a new company, and I'm in the US. As my first paycheck, I got my sign-on bonus and regular bi-weekly salary both in the same paycheck, summed together.
Does it make any difference in my income taxes eventually, compared to when I was getting them separately? Any pros/cons from taxing purposes?
I'm in illinois and I got only around %66 of the whole money.
united-states income-tax withholding income-tax-refund bonus
edited Dec 7 at 19:14
Chris W. Rea
26.4k1586174
asked Dec 7 at 17:05
Tina J
1414
I just joined a new company, and I'm in the US. As my first paycheck, I got my sign-on bonus and regular bi-weekly salary both in the same paycheck, summed together.
Does it make any difference in my income taxes eventually, compared to when I was getting them separately? Any pros/cons from taxing purposes?
I'm in illinois and I got only around %66 of the whole money.
united-states income-tax withholding income-tax-refund bonus
united-states income-tax withholding income-tax-refund bonus
edited Dec 7 at 19:14
Chris W. Rea
26.4k1586174
asked Dec 7 at 17:05
Tina J
1414
edited Dec 7 at 19:14
Chris W. Rea
26.4k1586174
asked Dec 7 at 17:05
Tina J
1414
edited Dec 7 at 19:14
Chris W. Rea
26.4k1586174
edited Dec 7 at 19:14
Chris W. Rea
26.4k1586174
edited Dec 7 at 19:14
Chris W. Rea
26.4k1586174
26.4k1586174
asked Dec 7 at 17:05
Tina J
1414
asked Dec 7 at 17:05
Tina J
1414
asked Dec 7 at 17:05
Tina J
1414
1414
add a comment |
add a comment |
1 Answer
1
active
oldest
votes
It will not make a difference in the amount that is actually incurred, but it could make a difference in the amount that is withheld, which could change the amount that you owe or the refund you get when you file.
Bonuses and other non-recurring income are withheld at a flat rate, while recurring pay is extrapolated out to a full year and withheld as if that were your total income for the year (less any exemptions depending on your tax status and dependents). Bonuses to not take exemptions into account since it's assumed that your exemptions are accounted for in your regular pay.
So if you had a bi-weekly paycheck that included a large bonus, you could have WAY too much tax withheld, since the tax tables would assume that you'd get that same amount in EVERY bi-weekly paycheck.
It won't be perfect, but it's more accurate to just have the bonus paid separately than to lump it with your "normal" paycheck.
It's also possible that your company's payroll system can separate bonus pay from regular pay and withhold for them independently, even if they're on the same paycheck, in which case there would be no difference at all.
answered Dec 7 at 17:36
D Stanley
51k8151159
Yes, that was what I was thinking as well. Right now, I got only around %66 of the whole money (I'm in Illinois). Later at the time of tax calculations, it will be taken care of given W2s. Right? No worries?
– Tina J
Dec 7 at 17:52
1
No worries. You could do some projections with your bonus plus your bi-weekly pay and withholdings to see how much of a refund (or bill) you can expect when you file, but the end result will be the same. 66% sounds about right - federal withholding is 25% income tax plus 7.65% medicare/SS, which means state withholding is about 3-4% which seems reasonable.
– D Stanley
Dec 7 at 17:57
Yes, that includes medicare/SS + federal and state tax. OK, thanks.
– Tina J
Dec 7 at 18:06
1
It depends on the company. Many pay one or two weeks "in arrears" to allow time to process any payroll adjustments (reimbursements, etc.) All it means is that you'll get another paycheck one week after you leave.
– D Stanley
Dec 7 at 18:10
1
My company pays twice a month on the 10th and 25th. The 10th paycheck is for the previous month's 16th through end of month while the 25th is for the 1st - 15st.
– mkennedy
Dec 7 at 19:21
|
show 3 more comments
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1 Answer
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It will not make a difference in the amount that is actually incurred, but it could make a difference in the amount that is withheld, which could change the amount that you owe or the refund you get when you file.
Bonuses and other non-recurring income are withheld at a flat rate, while recurring pay is extrapolated out to a full year and withheld as if that were your total income for the year (less any exemptions depending on your tax status and dependents). Bonuses to not take exemptions into account since it's assumed that your exemptions are accounted for in your regular pay.
So if you had a bi-weekly paycheck that included a large bonus, you could have WAY too much tax withheld, since the tax tables would assume that you'd get that same amount in EVERY bi-weekly paycheck.
It won't be perfect, but it's more accurate to just have the bonus paid separately than to lump it with your "normal" paycheck.
It's also possible that your company's payroll system can separate bonus pay from regular pay and withhold for them independently, even if they're on the same paycheck, in which case there would be no difference at all.
answered Dec 7 at 17:36
D Stanley
51k8151159
Yes, that was what I was thinking as well. Right now, I got only around %66 of the whole money (I'm in Illinois). Later at the time of tax calculations, it will be taken care of given W2s. Right? No worries?
– Tina J
Dec 7 at 17:52
1
No worries. You could do some projections with your bonus plus your bi-weekly pay and withholdings to see how much of a refund (or bill) you can expect when you file, but the end result will be the same. 66% sounds about right - federal withholding is 25% income tax plus 7.65% medicare/SS, which means state withholding is about 3-4% which seems reasonable.
– D Stanley
Dec 7 at 17:57
Yes, that includes medicare/SS + federal and state tax. OK, thanks.
– Tina J
Dec 7 at 18:06
1
It depends on the company. Many pay one or two weeks "in arrears" to allow time to process any payroll adjustments (reimbursements, etc.) All it means is that you'll get another paycheck one week after you leave.
– D Stanley
Dec 7 at 18:10
1
My company pays twice a month on the 10th and 25th. The 10th paycheck is for the previous month's 16th through end of month while the 25th is for the 1st - 15st.
– mkennedy
Dec 7 at 19:21
|
show 3 more comments
It will not make a difference in the amount that is actually incurred, but it could make a difference in the amount that is withheld, which could change the amount that you owe or the refund you get when you file.
Bonuses and other non-recurring income are withheld at a flat rate, while recurring pay is extrapolated out to a full year and withheld as if that were your total income for the year (less any exemptions depending on your tax status and dependents). Bonuses to not take exemptions into account since it's assumed that your exemptions are accounted for in your regular pay.
So if you had a bi-weekly paycheck that included a large bonus, you could have WAY too much tax withheld, since the tax tables would assume that you'd get that same amount in EVERY bi-weekly paycheck.
It won't be perfect, but it's more accurate to just have the bonus paid separately than to lump it with your "normal" paycheck.
It's also possible that your company's payroll system can separate bonus pay from regular pay and withhold for them independently, even if they're on the same paycheck, in which case there would be no difference at all.
answered Dec 7 at 17:36
D Stanley
51k8151159
Yes, that was what I was thinking as well. Right now, I got only around %66 of the whole money (I'm in Illinois). Later at the time of tax calculations, it will be taken care of given W2s. Right? No worries?
– Tina J
Dec 7 at 17:52
1
No worries. You could do some projections with your bonus plus your bi-weekly pay and withholdings to see how much of a refund (or bill) you can expect when you file, but the end result will be the same. 66% sounds about right - federal withholding is 25% income tax plus 7.65% medicare/SS, which means state withholding is about 3-4% which seems reasonable.
– D Stanley
Dec 7 at 17:57
Yes, that includes medicare/SS + federal and state tax. OK, thanks.
– Tina J
Dec 7 at 18:06
1
It depends on the company. Many pay one or two weeks "in arrears" to allow time to process any payroll adjustments (reimbursements, etc.) All it means is that you'll get another paycheck one week after you leave.
– D Stanley
Dec 7 at 18:10
1
My company pays twice a month on the 10th and 25th. The 10th paycheck is for the previous month's 16th through end of month while the 25th is for the 1st - 15st.
– mkennedy
Dec 7 at 19:21
|
show 3 more comments
It will not make a difference in the amount that is actually incurred, but it could make a difference in the amount that is withheld, which could change the amount that you owe or the refund you get when you file.
Bonuses and other non-recurring income are withheld at a flat rate, while recurring pay is extrapolated out to a full year and withheld as if that were your total income for the year (less any exemptions depending on your tax status and dependents). Bonuses to not take exemptions into account since it's assumed that your exemptions are accounted for in your regular pay.
So if you had a bi-weekly paycheck that included a large bonus, you could have WAY too much tax withheld, since the tax tables would assume that you'd get that same amount in EVERY bi-weekly paycheck.
It won't be perfect, but it's more accurate to just have the bonus paid separately than to lump it with your "normal" paycheck.
It's also possible that your company's payroll system can separate bonus pay from regular pay and withhold for them independently, even if they're on the same paycheck, in which case there would be no difference at all.
answered Dec 7 at 17:36
D Stanley
51k8151159
It will not make a difference in the amount that is actually incurred, but it could make a difference in the amount that is withheld, which could change the amount that you owe or the refund you get when you file.
Bonuses and other non-recurring income are withheld at a flat rate, while recurring pay is extrapolated out to a full year and withheld as if that were your total income for the year (less any exemptions depending on your tax status and dependents). Bonuses to not take exemptions into account since it's assumed that your exemptions are accounted for in your regular pay.
So if you had a bi-weekly paycheck that included a large bonus, you could have WAY too much tax withheld, since the tax tables would assume that you'd get that same amount in EVERY bi-weekly paycheck.
It won't be perfect, but it's more accurate to just have the bonus paid separately than to lump it with your "normal" paycheck.
It's also possible that your company's payroll system can separate bonus pay from regular pay and withhold for them independently, even if they're on the same paycheck, in which case there would be no difference at all.
answered Dec 7 at 17:36
D Stanley
51k8151159
edited Dec 7 at 20:29
answered Dec 7 at 17:36
D Stanley
51k8151159
answered Dec 7 at 17:36
D Stanley
51k8151159
answered Dec 7 at 17:36
D Stanley
51k8151159
51k8151159
Yes, that was what I was thinking as well. Right now, I got only around %66 of the whole money (I'm in Illinois). Later at the time of tax calculations, it will be taken care of given W2s. Right? No worries?
– Tina J
Dec 7 at 17:52
1
No worries. You could do some projections with your bonus plus your bi-weekly pay and withholdings to see how much of a refund (or bill) you can expect when you file, but the end result will be the same. 66% sounds about right - federal withholding is 25% income tax plus 7.65% medicare/SS, which means state withholding is about 3-4% which seems reasonable.
– D Stanley
Dec 7 at 17:57
Yes, that includes medicare/SS + federal and state tax. OK, thanks.
– Tina J
Dec 7 at 18:06
1
It depends on the company. Many pay one or two weeks "in arrears" to allow time to process any payroll adjustments (reimbursements, etc.) All it means is that you'll get another paycheck one week after you leave.
– D Stanley
Dec 7 at 18:10
1
My company pays twice a month on the 10th and 25th. The 10th paycheck is for the previous month's 16th through end of month while the 25th is for the 1st - 15st.
– mkennedy
Dec 7 at 19:21
|
show 3 more comments
Yes, that was what I was thinking as well. Right now, I got only around %66 of the whole money (I'm in Illinois). Later at the time of tax calculations, it will be taken care of given W2s. Right? No worries?
– Tina J
Dec 7 at 17:52
1
No worries. You could do some projections with your bonus plus your bi-weekly pay and withholdings to see how much of a refund (or bill) you can expect when you file, but the end result will be the same. 66% sounds about right - federal withholding is 25% income tax plus 7.65% medicare/SS, which means state withholding is about 3-4% which seems reasonable.
– D Stanley
Dec 7 at 17:57
Yes, that includes medicare/SS + federal and state tax. OK, thanks.
– Tina J
Dec 7 at 18:06
1
It depends on the company. Many pay one or two weeks "in arrears" to allow time to process any payroll adjustments (reimbursements, etc.) All it means is that you'll get another paycheck one week after you leave.
– D Stanley
Dec 7 at 18:10
1
My company pays twice a month on the 10th and 25th. The 10th paycheck is for the previous month's 16th through end of month while the 25th is for the 1st - 15st.
– mkennedy
Dec 7 at 19:21
Yes, that was what I was thinking as well. Right now, I got only around %66 of the whole money (I'm in Illinois). Later at the time of tax calculations, it will be taken care of given W2s. Right? No worries?
– Tina J
Dec 7 at 17:52
Yes, that was what I was thinking as well. Right now, I got only around %66 of the whole money (I'm in Illinois). Later at the time of tax calculations, it will be taken care of given W2s. Right? No worries?
– Tina J
Dec 7 at 17:52
1
1
No worries. You could do some projections with your bonus plus your bi-weekly pay and withholdings to see how much of a refund (or bill) you can expect when you file, but the end result will be the same. 66% sounds about right - federal withholding is 25% income tax plus 7.65% medicare/SS, which means state withholding is about 3-4% which seems reasonable.
– D Stanley
Dec 7 at 17:57
No worries. You could do some projections with your bonus plus your bi-weekly pay and withholdings to see how much of a refund (or bill) you can expect when you file, but the end result will be the same. 66% sounds about right - federal withholding is 25% income tax plus 7.65% medicare/SS, which means state withholding is about 3-4% which seems reasonable.
– D Stanley
Dec 7 at 17:57
Yes, that includes medicare/SS + federal and state tax. OK, thanks.
– Tina J
Dec 7 at 18:06
Yes, that includes medicare/SS + federal and state tax. OK, thanks.
– Tina J
Dec 7 at 18:06
1
1
It depends on the company. Many pay one or two weeks "in arrears" to allow time to process any payroll adjustments (reimbursements, etc.) All it means is that you'll get another paycheck one week after you leave.
– D Stanley
Dec 7 at 18:10
It depends on the company. Many pay one or two weeks "in arrears" to allow time to process any payroll adjustments (reimbursements, etc.) All it means is that you'll get another paycheck one week after you leave.
– D Stanley
Dec 7 at 18:10
1
1
My company pays twice a month on the 10th and 25th. The 10th paycheck is for the previous month's 16th through end of month while the 25th is for the 1st - 15st.
– mkennedy
Dec 7 at 19:21
My company pays twice a month on the 10th and 25th. The 10th paycheck is for the previous month's 16th through end of month while the 25th is for the 1st - 15st.
– mkennedy
Dec 7 at 19:21
|
show 3 more comments
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