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Payroll tax on starting bonus?

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  • Avatar bd4727 
    Participant
    Status: Resident
    Posts: 40
    Joined: 02/02/2016

    W2 employee. Was surprised to see this is this correct?

    #229582 Reply
    Avatar rbc001 
    Participant
    Status: Physician
    Posts: 12
    Joined: 04/09/2018

    was definitely the case for us – we paid taxes…

    not antagonizing, just wondering if i’m missing something… why would not being taxed on your bonus make sense?

    #229584 Reply
    Avatar bd4727 
    Participant
    Status: Resident
    Posts: 40
    Joined: 02/02/2016

    Tax I understand. Payroll tax idk since I received the $ Before even working?

    #229585 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2465
    Joined: 03/01/2018

    I believe the IRS considers bonus as “supplemental wages” https://www.irs.gov/publications/p15#en_US_2019_publink1000202354

    if social security and medicare taxes were avoided by paying bonuses then we would all pay ourselves increased “bonus” and decreased “salary”, to avoid those taxes

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #229587 Reply
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    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4694
    Joined: 01/08/2016

    yay learning about taxes!

    #229591 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8362
    Joined: 01/09/2016

    Yes, you owe it – c/b reported on W2 or 1099 as has been discussed beyond ad nauseum on another thread.

    Johanna Fox Turner, CPA, CFP: I am not your financial advisor; any responses are for general purposes only
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #229592 Reply
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    Avatar SWEng 
    Participant
    Status: Other Professional, Small Business Owner, Spouse
    Posts: 48
    Joined: 04/08/2017

    My wife’s new employer did the same thing and they put 6% of the bonus into a retirement account (automatic contribution).

    #229738 Reply

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