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.
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Whether it’s fixed salary/paycheck, fluctuating hourly paycheck, or annual/quarterly bonus, it’s all income as far as IRS is concerned. All money earned for working is income and taxed the same — the IRS doesn’t differentiate how your employer classifies the payment. Also, were the IRS to do so, it would be super easy for companies to manipulate that — just pay minimum wage and a huge bonus. Your bonus might be small relative to overall pay, but you could have Wall St. workers earning “minimum wage” with $1m bonuses.
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