topic I received a bonus from my company I was wondering how much the present of taxes should be taken out. They took 40%. Everyone is telling me it should only be 22%? in Get your taxes done using TurboTax

I received a bonus from my company I was wondering how much the present of taxes should be taken out. They took 40%. Everyone is telling me it should only be 22%?

deesleepy611 — Sun, 29 Nov 2020 04:32:24 GMT

My check was for around $1800 they took out around $800

Re: I received a bonus from my company I was wondering how much the present of taxes should be taken out. They took 40%. Everyone is telling me it should only be 22%?

macuser_22 — Sun, 29 Nov 2020 04:43:59 GMT

Ask the company how they figured it - nobody here can know the circumstances, however, in the long run it makes no difference since if your total withholding for the year exceeds the tax that you owe then when you file your tax return, you will get a refund of the difference.

Re: I received a bonus from my company I was wondering how much the present of taxes should be taken out. They took 40%. Everyone is telling me it should only be 22%?

rjs — Sun, 29 Nov 2020 04:59:55 GMT

When the bonus is paid in a separate check, the employer has a choice of two different methods for calculating the withholding on the bonus. One method is to withhold 22%. The other method is to add the bonus to the amount of your regular pay for one pay period, and calculate the withholding on the total as if you received that much in a single pay period. Then they subtract the tax that was withheld from your regular pay. The remaining withholding is taken out of the bonus. It sounds like they used the second method.

But as macuser_22 said, in the end it makes no difference. The money is not lost. If the withholding was more than necessary for your particular circumstances, you will get the excess back in your refund when you file your tax return.

Re: I received a bonus from my company I was wondering how much the present of taxes should be taken out. They took 40%. Everyone is telling me it should only be 22%?

Critter-3 — Sun, 29 Nov 2020 13:00:36 GMT

Ok ... remember it was not just federal taxes ... 22% min fed + 8% FICA + state tax + retirement/insurance.

Over withholding is common when large bonus/commissions are issued but be aware that the excess can be refunded on the return when you file it. Of course there is nothing you can do about it once it is done.