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Get your taxes done using TurboTax
Even if a person is compensated by something other than money, they need to claim the value of the thing they received.
For example, if a Landlord let a handy-man stay in a unit for free in return for working on the units, the handy-man would need to claim the value of the free rent as income.
But there are some exceptions to this rule. If an employer compensates an employee with certain awards, for such things as good attendance, safe work practice, that sort of thing, the employee does NOT need to claim the value of the thing they received.
"Cash awards or bonuses given to you by your employer for good work or suggestions must generally be included in your income as wages. However, certain noncash employee achievement awards can be excluded from income."
“Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. These include prizes such as vacation trips for meeting sales goals. If the prize or award you receive is goods or services, you must include the FMV of the goods or services in your income.”
If your award was cash, it needs to be claimed as income. It should be reported on your W-2.
BUT IT DOESN'T REALLY MATTER AS FAR AS HOW MUCH INCOME TAX YOU PAY.
Your income is reported as the FULL amount you earned, not just what you took home that week.
No matter where you put it, it all gets added together and the tax is figured on ALL the income you made in the year. (NOT just what went into your pocket)
Once the tax is figured on the income you made, the tax on that income is calculated.
THEN it looks at what you already paid through the withholding the employer did for you.
If you didn't have enough withheld, you have tax due.
If you had too much withheld, you get a refund.
A. If the bonus was 100,000 and they withheld 20,000 you would go home with 80,000
B. If the bonus was 100,000 and they withheld 10,000 you would go home with 80,000
If you do your tax return and the tax is 15,000 on that 100,000 income
A. You get a 5,000 refund
B. You owe a 5,000 tax payment
either way, you earned 100,000 paid 15,000 tax, so you netted 85,000
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