Lowering Taxes Paid on Signing Bonus

I would like to hear some advice from others who have received their signing bonuses, as to the best ways to minimize and/or defer the taxes due.  Thanks in advance for your feedback.

Bob Ellis

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Permalink Reply by maria armes on January 28, 2013 at 6:47am

Good Luck,  I ended up paying close to 1/3 of my check in Federal and State.  Ohio was 15%  But pay it on time because they will fine you for late pay.  When you get the bonus money there is a filing deadline on that part separate from your other income taxes.  

Permalink Reply by RichR on January 29, 2013 at 3:12am

IRS:  How much bonus money did you receive this year?

Me: $xxx.xx

IRS:  Give it to us.  :)

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on February 1, 2013 at 7:57am

How on Earth was Ohio 15%?  That's more than double the top rate.  Did you take this to someone at H&R Block or something?

Permalink Reply by M.A.B. on February 1, 2013 at 8:13am

in PA i was told to pay 28% to federal (could be 33% if i make more than i usually do and puts me in a different tax bracket) and a little over 3% to PA. It is all lumped in to your total yearly earnings. The only difference is the bonus money is considered rental income so you do not pay SS and medicare on it.

Permalink Reply by maria armes on February 2, 2013 at 3:26am

I did unfortunately and I believe it may have been a mistake however, when I went back to file my income taxes, is when I found out I still owed the state more money and they were trying to fine me for filing late.  Any suggestions to get some of it back?   

Permalink Reply by Angela Smith on February 1, 2013 at 1:28pm

I believe that the above response is incorrect.  Please consult a good CPA.

Permalink Reply by M.A.B. on February 1, 2013 at 3:32pm

Angela, What makes you say that

Permalink Reply by Angela Smith on February 2, 2013 at 1:31am

The top tax rate for Ohio in 2012 is 5.925%.  The payment of federal estimated taxes is based on your prior tax liability.  If you had none the year before receiving the bonus, you would not be required to pay estimated taxes.  There are other aspects to this that a good accountant can explain.

Permalink Reply by maria armes on January 29, 2013 at 11:47am

Enough to pay out 1/3  OUCH  I paid on time but the tax person didn't charge me enough for Ohio and they tried to fine me but I got it taken care of as it was not my fault.  I agree with Joe get a GOOD accountant.  

Permalink Reply by jeff on February 1, 2013 at 7:34am

Would it make sense and/or any difference to have the bonus spread out over several years?

I know its too late for those who have recieved their payment, but for the rest of us...

Jeff

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on February 1, 2013 at 9:04am

Companies aren't doing that anymore.

Permalink Reply by Donald on February 1, 2013 at 2:49pm

Take your payment in stock, or stock options. when you sell it's capitol gains taxed at a lower rate. or ask for 50% roalitys untill the agureed upon payment is met .taxed at depleation allowance.

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