How Is Bonus Income Taxed?

Tax Withholding

The IRS has rules that must follow withholding tax employer control of bonus income. How much will be retained and which system is used to calculate this amount, depends on how much bonus income is involved in in the first place. If the bonus in the amount of $ 1 million, employers are obliged to refuse 35 percent regardless of other factors. However, if the bonus income less than $1 million, have employers a number of options if it hold back is a question. This depends on the rule the tax bracket, the number of exemptions you claim on your W-4 form and if the bonus paid with wages is regular within a pay period or handled separately as bonus income.The IRS detailed instructions, how these should be calculated, the IRS Publication 15 (see resources) are outlined. Many employers refuse to be premium on the safe side but only 25 percent of your income. Learn from your employer in hold back whatever system is used. If your employer uses the specific approach, you can a good online calculator to estimate how much will be withheld from your bonus check

What You Pay

The IRS treats bonus income as extra income. You pay the amount of tax income finally on the bonus, if your tax return depends greatly on your personal circumstances. Their entire income and deductions that you use in order that are taken into account at this point. When you use a tax registration software, you need only a few questions to answer and it automatically calculates how much, if any, tax you debt.