Hi,

In early 2007, I have received a bonus ($1,000). When this bonus was paid, I did not pay any taxes on it. This was processed by Paychex.

As a J1 visa holder, I understand why I did not pay Social Security, Medicare and NYC taxes, but I also did not have to pay Federal and New York State taxes.

Don't individuals pay any taxes on bonuses in the U.S.

Thanks for clarification,

Kolja

Used to be the bonuses were considered income and in Canada we pay income tax on that amount even if it is a separate cheque and not deducted immediately, if it goes in your bank account you still have to declare it as income.

Bonuses are considered part of your pay.

SOMETHING should have been withheld. Consider yourself lucky that nothing was.

You WILL have to claim it on your federal and state tax returns, however.

Thanks, AtlantaTaxExpert.

Does this mean that I will have to pay all applicable taxes (under the J-1 visa, it'll be Federal and NY State taxes) when filing taxes for 2007 next year? This means it seems to be a good advise to set up "accruals" for this, e.g. save 25% of the bonus instead of spending it. Right?

Thanks again for the help.

Best regards,

Kolja

Yes, it means you WILL have to pay federal and NY state taxes.

Putting about 25% of the money aside is a good idea.