Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 10-12-2009, 09:47 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,252
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).
LOL! is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-13-2009, 10:59 AM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 17,203
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...
Texas Proud is offline   Reply With Quote
Old 10-15-2009, 09:49 PM   #23
Thinks s/he gets paid by the post
Finance Dave's Avatar
 
Join Date: Mar 2007
Posts: 1,854
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 period...so 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).
Finance Dave is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Another Lopsided Poll: AIG bonuses. clifp FIRE and Money 73 03-18-2009 04:49 PM
Bonds for kids- how are they taxed? jIMOh FIRE and Money 11 08-26-2008 03:44 PM
Help with Portfolio being taxed Shabber2 FIRE and Money 4 05-03-2008 06:53 AM
Why are lottery winnings taxed RedHawk FIRE and Money 26 01-20-2007 06:04 AM

» Quick Links

 
All times are GMT -6. The time now is 04:37 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.