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    kdunley's Avatar
    kdunley Posts: 1, Reputation: 1
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    #1

    Nov 8, 2012, 07:37 PM
    Paying taxes on employee bonuses
    I was paid a employee referral bonus of $1,000. It was a separate check and I received $581.00. What method did they use? I work for a company of about 500 people. How is this fair?
    ma0641's Avatar
    ma0641 Posts: 15,675, Reputation: 1012
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    #2

    Nov 8, 2012, 08:18 PM
    A bonus is still considered earned income. Depending on your tax bracket and where you live, a 40% witholding isn't outrageous. Fed IT-25%, State IT (?), maybe City IT, Social Security-7.5%, possibly unemployment insurance..
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Nov 9, 2012, 09:24 AM
    Social security is 4.2%, while Medicare is 1.45%.

    In total, the withholding looks correct.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #4

    Nov 9, 2012, 10:37 AM
    In addition to what the previous posters mentioned, some companies also deduct for a 401(k) plan contribution from bonus money like this. You should receive a pay stub that shows the accounting which should make it clear how they did the math.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #5

    Nov 9, 2012, 05:13 PM
    I agree, a 1000 check is normally about that 40 percent taken out. I know that is what they used to get out of mine
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