Say the bonus is $8000 and $6800 are set for a 401k (pre-tax) deduction. Here's the tax breakdown. Does this look right? Shouldn't the taxes be calculated on the $1200? ($8000 minus $6800 due to pre-tax 401k contribution)
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Not an answer because I'm not certain, but looks like the federal taxes are quite low (~22% of your 1.2k net income), and it is the other lines with higher contributions. Are social security etc. payments made based on gross income instead of net income?– Grade 'Eh' BaconMar 27, 2020 at 17:44
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@Grade'Eh'Bacon Looks like 22% is applied on $8000 instead of $6800 in this case!– user6123723Mar 27, 2020 at 18:34
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1Fed taxes are $264, which is the federal taxes payable; see answer below for detailed answer in line with what I was suggesting might be the case.– Grade 'Eh' BaconMar 27, 2020 at 18:49
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1 Answer
Social security and medicare taxes are still levied on 401k contributions at a total of 7.65%. Looking at your table, ($496 + $116)/$8,000 = 7.65%.
Federal taxes were 22% of $1,200 (0.22 x $1200 = $264) which is inline with IRS rules, as pointed out by users in the comments. State taxes look like they are levied on the $1,200 as you expected. But, you can look up the corresponding rates and check the numbers to be sure.
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4Specifically, fed tax is 22% of taxable income which is correct for bonus income in 2020 Mar 27, 2020 at 17:54
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2To @DStanley's point, here's where it says that: irs.gov/publications/p15#en_US_2020_publink1000202354 Mar 27, 2020 at 17:56
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2@user6123723 which ones? Social security and medicare are both applied to the total $8,000.– NosjackMar 27, 2020 at 18:44