I work in a profession where my bonus is a small set amount and isn’t guaranteed (you have to qualify for it). I really look forward to earning the bonus and have to work pretty hard to get it. So why are bonuses taxed when I already have my regular salary chopped up? It’s pretty disheartening to see this small amount reduced after earning it.
In: 0
They withhold at the highest rate. It’s just easier that way because your employer doesn’t know what your total income situation is (might have a side job or extra income elsewhere that affects your marginal tax rate). They just withhold the max, and then you settle out with the IRS every April when you file taxes, and anything withheld that was above and beyond your actual tax liability is refunded back.
Latest Answers