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Re: Salary Question: Bonus?

Subject: Re: Salary Question: Bonus?
From: "Fred Ridder" <docudoc -at- hotmail -dot- com>
To: gps03 -at- health -dot- state -dot- ny -dot- us
Date: Thu, 28 Dec 2006 16:13:47 -0500

There is no inherent reason why bonuses should be taxed at a higher
rate than your regular income. The only way this would happen is if
the bonus payment is handled by the payroll processors as if it were
a regular weekly paycheck so that they multiply it by an incorrectly
high factor (e.g. 52 if you have weekly pay periods or 24 if you are
paid semi-monthly) to "annualize" the amount before plugging the
number into the tax calculation.

Also, even if the bonus is taxed at the next higher bracket, most of
us would see only a 3-point increase in the Federal tax rate (from
25% to 28% marginal rate). Even if the bonus were taxed at a
marginal rate that is 8% or 10% higher than your real bracket
(a 2-bracket jump), this would still only devalue the bonus by
$360-$450 (8-10% of the $4500 bonus), not the ~$2500 figure
you mention. In this scenario, it's only the differential in taxes and
not the total tax bite that counts.

-Fred Ridder


From: Gregory P Sweet <gps03 -at- health -dot- state -dot- ny -dot- us>
To: Al Geist <al -dot- geist -at- geistassociates -dot- com>
CC: techwr-l-bounces+gps03=health -dot- state -dot- ny -dot- us -at- lists -dot- techwr-l -dot- com,techwr-l -at- lists -dot- techwr-l -dot- com
Subject: Re: Salary Question: Bonus?
Date: Thu, 28 Dec 2006 14:59:36 -0500



Al said:
> I'm a bit confused. I've had companies in the past offer a base salary
> plus bonus based on company profits. Is this what you are saying, or are
> you saying that if you do good, you could get up to an additional 10% of
> your salary as a bonus? If it's the latter, and you do good, you're
> saying you would make $49.5K with the bonus, still less than the $50K
> they would have offered without the bonus. Sounds like a way for the
> employer to make the employee work harder for less money. Maybe I'm
> missing something......

Factor in that bonuses have a higher tax rate (55-60% IME) and that number
comes down even further, $47,025.

-Greg

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Re: Salary Question: Bonus?: From: Gregory P Sweet

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