Ive heard bonuses are taxed at 22 percent and also they are taxed as ordinary income. What is the truth?

[NCperson · Accepted solution]

@esreinfurt - bonuses are taxed just like the rest of your earnings - it is 'ordinary income'

But don't confuse 'withholdings' with 'tax'.... they are different.  The IRS requires companies to WITHHOLD 22% of the bonus, but the actual TAX is based on your tax bracket.   

So if you are in a 12% tax bracket that would suggest a big refund in April, if you are in a 28% tax bracket, not enough was withheld and that would suggest a smaller refund or owing comes April. 

The reason we all do taxes each April is to 'settle up' the tax that is calculated LESS what is withheld during the year - that results in either a refund or more money due.