topic Will a year end bonus that changes my tax bracket increase the amount of tax that I pay (already deducted) on my regular salary? Thank you in Get your taxes done using TurboTax

Will a year end bonus that changes my tax bracket increase the amount of tax that I pay (already deducted) on my regular salary? Thank you

misskq — Thu, 03 Dec 2020 15:04:28 GMT

Re: Will a year end bonus that changes my tax bracket increase the amount of tax that I pay (already deducted) on my regular salary? Thank you

xmasbaby0 — Thu, 03 Dec 2020 15:16:02 GMT

Your tax liability is determined by the total amount of income you receive in 2020--so if the bonus is paid in 2020 it will be on your 2020 W-2. You will enter your W-2 and it will include the gross income you received as well as the tax withheld. The software will do the calculations. Only the amount (if any) of your income that is above the previous tax bracket is taxed at the higher amount.

Re: Will a year end bonus that changes my tax bracket increase the amount of tax that I pay (already deducted) on my regular salary? Thank you

NCperson — Thu, 03 Dec 2020 15:28:23 GMT

a) what tax bracket are you in?

b) what percent of the bonus is being withheld for federal taxes?

if b) is higher than a), you should be fine

if a) is higher than b), you will owe more / get a smaller refund than would have occurred without the bonus

if you are asking about the specific paycheck, payroll departments are supposed to use a different formula to withhold federal tax on bonus payouts compared to normal paychecks. So the withholding on the bonus should not impact what is normally withheld for your normal paycheck.

does that help?