Bonus income combined with regular income on my W-2, but when I was paid it was paid to me in separate checks.

[fellynbal]

And, IRS told me on the lines to report the bonus income on Schedule 1, they said on the lines that the employer doesn't separate the money from the regular pay, but that I had to separate it on my tax return(s) if I understood correctly.  The bonus money my past employer paid me, that was included in Box 1 etc. on my W-2, but when they paid it out it was on separate checks, how can I report that income?  Do I just leave it the way it is on the W-2 with the regular wages, or do I need to separate the amount for the Bonus money and report it in a separate section of my tax return so that it will charge me the correct tax percentage if that applies?  (I read about bonus' being taxed at a percentage of 22% versus regular pay at a different percentage rate, if your employer paid you a separate check or and however for the bonus.  The employer did put it on a separate check and paid it separately whenever they did, but on the W-2 they combined it into one lump sum of money at least in Box 1 etc.) 

[Mike9241]

that IRS agent does know grass from a tree if that is what you were told.  if they were included in box 1 there is no separate reporting. 

[Vanessa A]

Yes, you will leave the bonus on your W-2 the way it is with your regular wages. 

Bonus money is included in Box 1 of your W-2.  It is taxed and treated the same as your regular wages. 

When it is paid in separate checks, the taxes withheld can be different than your regular income wages, WHEN it is withheld.  This is because that bonus is treated as supplemental income instead of just your regular every day pay and it may boost your tax bracket depending on the amount.   However, when it comes time to file your taxes it is lumped in with all your other wages and treated the same. 

How Bonuses Are Taxed

[fellynbal]

I need to take a break from the conversation, however I may continue after awhile.

[fellynbal]

The Bonus' were paid in separate checks, that was my bonus income for Perfect Attendance, even for not taking Heathcare Insurance they paid me Bonus' for that, and also after I started as a Full time employee they gave me a sign on bonus in Increments and that was also in separate paychecks than my other income.  So, what should I do lawfully to be right?  I did calculations for some of my bonus' and on my paystubs they were NOT taxed at the 22% rate, at least some if not all were not even taxed enough for the lower rates, but if I'm not mistaken the employer does pay part of the taxes, so maybe they paid the other portion but did not report it on my checks nor W-2.   It is the Federal, not the Social Security and the Medicare, that may be subject to the Supplemental tax difference, am I correct?  

When reporting on the tax return the Miscellaneous income, regardless to what kind of income you put there, will the software calculate the 22% for me if need be or and whatever the items tax rate may should be, or and will it calculate at another tax rate or so?

[CatinaT1]

You are confusing tax rate and withholding rate. 

Bonuses are considered wages and are taxed the same way as other wages on your tax return. However, the IRS doesn’t consider them regular wages. Instead, your bonus counts as supplemental wages and can be subject to different federal withholding rules than your regular wages when your get paid your bonus. 

Enter your W2 as it is and you will be fine.

For further information refer to the link Vanessa A referred you to here: How Bonuses Are Taxed

[fellynbal]

Good afternoon,

Thank you for your input.  

What is the difference between Withholding Rate versus Tax Rate?  

If I can understand and know what is the correct thing to do, then my mind may be at rest, however if I don't know or and don't understand, then it leaves a gray area so to speak.  I want to tell the complete truth on my tax return(s).

[KrisD15]

Withholding rate is how much the employer (or payer) takes out of your earned income and sends in to the IRS.

Tax Rate is what you end up paying after you complete your tax return.

If you get a refund on your tax return, the withholding rate may have been a bit higher compared to the tax rate calculated on your tax return.

If you end up with a payment due, the withholding rate may have been a bit lower compared to the tax rate calculated on your tax return.

No one knows their tax rate until after they do their tax return.

Withholding rate is a guess as to what your tax rate will be. 

[fellynbal]

Thank you for your input.

My Bonus checks were paid to me separately than at least some if not all of my other pay. 

This is from Turbo Tax website:  (I changed the word separately to bold print)

If your supplemental wages are identified separately from your salary (as a bonus, for example), your employer must withhold taxes using one of the following two methods:

• Withhold at the supplemental rate of 22 percent.

With this being said, does the Employer have a choice how much they withhold from the Bonus' even if they paid them to me separately from my regular pay etc., or if not how would the IRS and my State even know how to charge me the difference that wasn't charged me if that may be the case, if some Bonus and Regular pay are in one lump sum in Box 1 etc. on the W-2?

[DianeW777]

It depends. The employer does have some control when paying a bonus, however most often they use a flat 22% for federal withholding.  The link below will provide more information for you.

• How Bonuses Are Taxed

When W-2s are issued it should include regular wages and any bonus pay.  Likewise the federal withholding will a combined amount of your regular federal withholding and the 22% withheld from your bonus.

When you file your tax return, it is all included with your return to determine total tax, refund and/or balance due.

@fellynbal 

[fellynbal]

My most recent cash bonus was in 2024 year for $85.85 before taxes withheld, so using the tax calculator it seemed like maybe the employer used a 6% Annual income tax rate, and used the Aggregate Method, and only charged me at or close to half of the Aggregate Method rate.  Am I legally responsible to report and pay taxes on the part the Employer may have paid (they may of paid at or about half of withholding)?  Infact, if I'm not mistaken the payroll specialist mentioned something at least about paying however for the employee.

[KrisD15]

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. 

According to the IRS:

"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