My employer added $409.39 to my taxable income (reported in Box 1) which represents $268 for guaranteed term life > $50k (which I am OK with) plus $141.39 which equals the tax withheld on that grossed up amount of $409.39 ($90.07 at the 22% bonus rate, $31.32 FICA at 7.65% and $20 state). I am OK with the $268 being added to my taxable income, but it seems to me that because the $141.39 of taxes was added to the taxable income on my W-2 that I am actually now paying tax on tax. Am I missing something? Thank you.
