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I just joined a new company, and I'm in the US. As my first paycheck, I got my sign-on bonus and regular bi-weekly salary both in the same paycheck, summed together.

Does it make any difference in my income taxes eventually, compared to when I was getting them separately? Any pros/cons from taxing purposes?

I'm in illinois and I got only around %66 of the whole money.

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It will not make a difference in the amount that is actually incurred, but it could make a difference in the amount that is withheld, which could change the amount that you owe or the refund you get when you file.

Bonuses and other non-recurring income are withheld at a flat rate, while recurring pay is extrapolated out to a full year and withheld as if that were your total income for the year (less any exemptions depending on your tax status and dependents). Bonuses to not take exemptions into account since it's assumed that your exemptions are accounted for in your regular pay.

So if you had a bi-weekly paycheck that included a large bonus, you could have WAY too much tax withheld, since the tax tables would assume that you'd get that same amount in EVERY bi-weekly paycheck.

It won't be perfect, but it's more accurate to just have the bonus paid separately than to lump it with your "normal" paycheck.

It's also possible that your company's payroll system can separate bonus pay from regular pay and withhold for them independently, even if they're on the same paycheck, in which case there would be no difference at all.

  • Yes, that was what I was thinking as well. Right now, I got only around %66 of the whole money (I'm in Illinois). Later at the time of tax calculations, it will be taken care of given W2s. Right? No worries? – Tina J Dec 7 '18 at 17:52
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    No worries. You could do some projections with your bonus plus your bi-weekly pay and withholdings to see how much of a refund (or bill) you can expect when you file, but the end result will be the same. 66% sounds about right - federal withholding is 25% income tax plus 7.65% medicare/SS, which means state withholding is about 3-4% which seems reasonable. – D Stanley Dec 7 '18 at 17:57
  • Yes, that includes medicare/SS + federal and state tax. OK, thanks. – Tina J Dec 7 '18 at 18:06
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    It depends on the company. Many pay one or two weeks "in arrears" to allow time to process any payroll adjustments (reimbursements, etc.) All it means is that you'll get another paycheck one week after you leave. – D Stanley Dec 7 '18 at 18:10
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    My company pays twice a month on the 10th and 25th. The 10th paycheck is for the previous month's 16th through end of month while the 25th is for the 1st - 15st. – mkennedy Dec 7 '18 at 19:21

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