When to accept a signing bonus--2007 or 2008?

tyg421 · #1 Nov 14, 2007, 04:58 PM

I am currently a senior in college. I just signed an offer to return to my summer employer full-time in summer 2008. I can accept my signing bonus in either 2007 or 2008? When should I take the bonus? And how will it be taxed? Thanks!

ebaines · Nov 16, 2007, 05:00 AM

A general rule of thumb is that you typically want to defer income into the next tax year and pull deductions forward into the current tax year, if possible. However, in your case it may be best to take the bonus now, since as a senior in college you probably will have significantly more income in 2008 than 2007, and consequently could be in a higher tax bracket next year. Compare your 2007 income against your anticipated 2008 income, and if your '08 income puts you in a higher bracket take the bonus now.

tyg421 · Nov 16, 2007, 06:53 AM

Great! You're right, my income will increase significantly in 08, so I'll take it now. Thanks for the help.

tyg421 · Nov 16, 2007, 06:37 PM

My income will increase at least 4x in 2008. Is that enough of a gain to merit taking the bonus in 2008? Thanks. Have a great weekend.



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