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Old 10-12-2009, 09:47 PM   #21
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I always ask that a year-end bonus be delayed until January of the next year and I contribute all (possible) of it to my 401(k).

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Old 10-13-2009, 10:59 AM   #22
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I have not seen any mention of an option... if the company has it...

My old company allowed the higher ups to defer some or all of their bonus to a later year... they had to make the option prior to it being awarded and it was binding on them... but the money (if deferred) was now an ordinary liability of the corp.. and you would get it when you retired.. and pay taxes then...

Otherwise, like others say... get it now, pay taxes now as ordinary income.. BTW, it was not in another box on the W-2...

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Old 10-15-2009, 09:49 PM   #23
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I think the perception that bonuses are taxed higher is because on the paycheck they appear, they are taxed at that time as if you made that amount every pay if it moves you up to a higher incremental bracket you'd see it taxed more heavily on the paycheck...but it is true that IN THE END it's taxed as ordinary income.

My explanation may not be clear, so let me try it this way. Let's say your "normal" check is $5,000 a month, and you pay $1,000 taxes...or 20%. Now let's say you get a bonus check for $50,000 all at once. The taxes would be more than $10,000 (20%) ON THE PAYCHECK, but at the end of the year your tax rate would end up being close to 20% (maybe not exactly 20% if the bonus put you in the next higher bracket).

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