Replies to This Discussion

Permalink Reply by bville on May 27, 2012 at 11:41am

Deron,

   

      It depends on your tax bracket. You can check that on the IRS website. The maximum for federal is 35%, but you also have to pay the state. The state maximum is 6.8%. I believe those numbers are correct.

 

                                                                                                         your neighbor

 

Permalink Reply by Kathleen on May 27, 2012 at 1:59pm

Remember it is considered income and is taxed as such. The tax steps up which you will see on the IRS website like someone already mentioned.
Im just going to make up numbers now just to give you a feel of what I'm saying. If you have no other income to report and you get say 100 thousand for the bonus, the first I think it's up to 8 grand is taxed at 10% than if you are below 80 thousand after deductions you pay 15 % of that money than there is more jumps all the way up to 36% (?) for federal. Basically you pay higher only on the money that is now in the higher bracket not all of it. Most Americans are in the 15% bracket yearly so you really feel this extra tax on the bonus since we are not used to losing so much to taxes.
The same goes for state but the tax rates are much lower, nothing like 20 30%.
A good tax accountant can help a little with IRA's or other stuff but you can only offset so much with an IRA and its not a lot if you got a big bonus I'm sorry to say.
In my mind 40% will be gone after taxes and if I can get that lower than I will feel like I got another small bonus next April. I've already heard about people who got bonuses last year spent it all and didn't pay any taxes. I hope everyone just puts the money aside until their personal taxes are filed and sent in.

Permalink Reply by Bluflame on May 28, 2012 at 12:59pm

Deron,

  Your 30-40% estimate is in the ballpark including state & local(if any) income taxes. Dependent upon your tax situation, your other 2012 income and the size of your 2012 (assumed) bonus, you may need to pay quarterly estimated taxes to avoid an expensive penalty at year-end. It really is IMPERATIVE to meet with a tax advisor, and/or find one very soon. 2Qu 2012 estimated taxes are due in June. The cost of tax advice is lower than legal advice, but can save you a bundle at 2012 tax prep time.

  And supporting Kathleen's response, there really are not many good options to offset bonus tax liability. An IRA pushes some tax liability to retirement years when, in theory, your tax rate is lower due to lower income. But it may be false economy if you are receiving royalty payments at that time. BTW, I received a 2012 sign-on bonus for a Belmont County lease, and have done considerable homework seeking tax relief, so far to little avail. 

Good luck, and remember that lots of people out there would love to have our tax "problem"!

BluFlame