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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' Bacon Mar 27 '20 at 17:44
  • @Grade'Eh'Bacon Looks like 22% is applied on $8000 instead of $6800 in this case! – user6123723 Mar 27 '20 at 18:34
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    Fed 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' Bacon Mar 27 '20 at 18:49
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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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    Specifically, fed tax is 22% of taxable income which is correct for bonus income in 2020 – D Stanley Mar 27 '20 at 17:54
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    To @DStanley's point, here's where it says that: irs.gov/publications/p15#en_US_2020_publink1000202354 – user662852 Mar 27 '20 at 17:56
  • Good stuff, added to the answer. – Nosjack Mar 27 '20 at 18:00
  • Should these taxes be applied on $8000 or the $6800? – user6123723 Mar 27 '20 at 18:34
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    @user6123723 which ones? Social security and medicare are both applied to the total $8,000. – Nosjack Mar 27 '20 at 18:44

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