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Old 06-18-2012, 02:42 PM   #1
leahmoss
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Post $750,000 Bonus / Payroll Taxes

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I'm needing help. I will be processing a discretionary bonus to an employee in a few weeks and my boss wanted me to look into it. He seems to think there is a tax law on a certain bonus amount. The bonus check will be $750,000......Does anyone know of a certain payroll tax law in regards to a check of that amount?
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Old 06-20-2012, 06:03 AM   #2
Juno
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I will be processing a discretionary bonus to an employee in a few weeks and my boss wanted me to look into it. He seems to think there is a tax law on a certain bonus amount. The bonus check will be $750,000......Does anyone know of a certain payroll tax law in regards to a check of that amount?----> Bonus payments, in fact virtually anything received of value, are the same as cash or any other income received from your employer for tax purposes. It is simply an 'Income' and therefore subject to income based taxes. A discretionary bonus is based on no objective criteria and not routine, thus payment is not required. With a large bonus, the withholding rate may be higher, because it pushes your annual income for the year into a higher tax bracket. Employers ALSO may tax all bonuses using a flat tax rate. In 2011, the tax rate is 25 percent of any bonus of less than $1 million. By law, 25% for Federal income tax plus 5.65% for FICA(both Employer and Employee portions). If your state has a statutory withholding amount for bonuses or irregular payments, add that on top.
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