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My employer offers the option of deferring my bonus payment to 2015 i.e instead of taking it in December, I have the option of taking it in 2015.

Now, I understand if I was planning to retire/quit in 2015, I may want to take it in 2015 to reduce taxes since it is taxed at marginal rate, but other than that, are there any reasons to defer the bonus payment?

  • Please add a tag to specify the country, as the specific factors influencing this are likely to vary. – Ganesh Sittampalam Nov 17 '14 at 21:18
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This option is useful if for any reason you think you will have a lower taxable income in 2015 than 2014, or you can arrange for that to happen. Retirement is an obvious case, but others might include:

  • Intending to take maternity or paternity leave
  • Planning on moving to a lower paid or unpaid job (such as home-maker)
  • Wishing to put the bonus in an RRSP but not having contribution space this year
  • Being able to do income splitting next year but not this year
  • Having an unusually high income this year, such as another bonus or income from a second job or investments
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    in addition even if your income will be the same in both years, you can at least delay paying the tax on the bonus. If you receive it Dec 31st 2014 you will have to pay the taxes on it right away; receive it one day later and you'll pay the taxes a year later. (If your employer withholds the taxes on it this is less relevant, but perhaps they don't.) – Kate Gregory Nov 19 '14 at 13:27
  • @KateGregory - but if the bonus is big enough, and no tax withheld, a penalty will follow. The "delayed tax at same rate" never really struck me as desirable. – JoeTaxpayer Nov 19 '14 at 19:50

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