Taxes on Bonus

[grace236]

Last year, almost 1/3 of my income was from bonuses. I read that bonus is considered supplemental income, which is taxed at 22 percent. Where on my W2 form can I find entry for the bonus amount and how can I enter this in Turbo Tax to take advantage of the lower tax rate of the bonus amount?

[xmasbaby0]

Your employer may have withheld tax from your bonus at 22%.   But your overall tax liability determines how much tax you owe.   You are not ultimately taxed at a different rate for the bonus.    Your refund or tax due will be based on your total income and the difference between your tax liability and the amount of tax withheld from your income.   Enter your W-2 exactly as it is shown.  You do not make adjustments to the way you enter data from a W-2.

[AmyC]

No, the withholding requirement of 22% is not the same as your taxable income. All of your income is added together to determine your tax rate (capital gains aside with their special rules). The amount withheld is already listed in your box 4, if a w2. If 22% was withheld and your bracket is higher, you will owe taxes. See How Bonuses Are Taxed - TurboTax Tax Tips & Videos by the employer for withholding, which is not the same as the IRS.