Why does TT falsely state that "bonuses are taxed at the highest rate"? Bonues may be subject to a 22% flat withholding, but withholding rate does not equal tax rate.

[xmasbaby0]

Where did you see a statement from TurboTax about bonuses being taxed at the highest rate?

[Spino]

I would interpret this to mean that bonuses end up being taxed at your marginal tax rate--in other words, some of your income is not taxed, some is taxed at the lowest rate, and so forth until you reach your top rate, called your marginal tax rate because this is the top margin of where your paying tax. It is not the absolute top rate for all taxpayers unless your total taxable income falls into the top tax bracket.

So, I think you are right, but you can read TT as right also, although not clear enough to communicate with you unless TT is just wrong here, which I suppose is also possible in the universe as a whole.

Of course, if you prefer, you could think of your bonus as taxed at your lowest rate and some other income getting bumped up to a higher rate instead :-). My father-in-law said he didn't want any tax withholding coming from his pension because he liked to see the whole amount after working all those years. So we did the tax withholding somewhere else :-).

[Critter-3]

I think it means that those are WITHHELD (not taxed)  at the 22%  rate however that is not the same rate of taxes you will actually pay.  

[brandon2987]

It's on one of the flow-through pages after clicking on "received raise or bonus".  I agree that TT's likely intent was to describe the withholding rate, but TT should be making this distinction rather than contributing to misinterpretation.  As a CPA, it baffles me how many folks truly think that bonuses are taxed at a higher rate rather than simply being withheld at one.  And this statement on TT's on website isn't helping matters in the least.