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49

There is no downside for you but there is for the company. If the company has a bad year, it can stop your bonus but it can't reduce your salary (or at least that is much harder to do). When is the last time you got a raise? Since you are getting good bonuses you seem like a valuable employee. Why not just ask for a raise without mentioning your bonus?


30

Are you in the US? One thing you can do is prepay taxes at a rate of a 1.8% fee. Much lower than paypal. I would do this on what is "left over". Here are somethings that I would tend to do in your case: Pre-buy gifts. Do your Christmas shopping now. Even if you don't know what to buy, you can get gift cards to the stores you are likely to buy from. ...


29

The gift card for specific stores has no fee. In our budget of nearly $500/mo for supermarket, it would be easy to just buy 10 x $500 cards, and then be careful with them. A look at your past 12 mo of spending should provide a hint what GCs might work for you. Else, for a $4.95 fee, I've bought $500 generic Visa cash cards. When my new credit card offered ...


29

Can some please explain if there has been a stock slit/bonus how come the price of the stock did not change Before the stock split the stock was priced around 3500. Once a stock split happens, all financial sites factor the split and adjust the price. The reason for adjustment is to give a good comparison; else it will look like there was a 50% decline in ...


27

I don't think that there's a way to maximize this. Even more importantly, you shouldn't be attempting to do so. Whether you're investing or you're actively trading, you should place your trades based the merit of the trade rather than the cost of doing the trade.


19

Most likely the company will withhold a portion of the bonus for tax purposes already. So then it really depends on your withholding rate. If they don't withhold enough and you're going to owe some tax come April of the following year, then you're slightly better off being able to delay that payment so you can earn some interest until then. If you're going ...


18

I see four key differences. Usually a bonus is paid as a lump sum at the end of the year -- maybe a calendar year, maybe the anniversary of you starting with the company. I'll assume this is the case for purposes of discussion. So let's compare job A, which will pay, say 1000 foobars a month, with job B, which pays 900 foobars a month and a 1200 foobar ...


16

In the US, withholding has nothing to do with your actual tax liability. You control the amounts withheld via form W4 that you provide to your employer. It is up to you what to write in that form, and how much is withheld will be based on that. You may limit the withholding and have nothing withheld at all, or withhold twice as much as your real tax ...


15

There really are multiple aspects to this. The calculatory time value aspect: Assuming that job X and Y will in total pay you the same amount, the time value of the salaries in job X are higher because job Y pays a large part only in the end of the term. In practice, you can dismiss this pretty much since short term interest rates are, currently, close to ...


13

Is it any different than if I decide to put similar amount of money in 401(k) at some other time of the year? Not from a tax standpoint, but if can affect a few other things: You will start earning returns (or face losses) earlier if you take it out of your bonus now versus take it out from future paychecks If your total contributions including your bonus ...


13

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 ...


11

You would need to have remembered the actual stock price before, and compared it to the stock price now. E.g. I remember when GOOG had spent a couple years climbing to about $780, and then blam, it was $112. That was a 7:1 split. Charts correct for the split. If you looked at a GOOG chart a week after the 7:1 split, the chart would show that GOOG had ...


10

A bonus isn't a gift, even if it's paid with a gift card. It's earned compensation, and it gets taxed as part of your salary. If it was a gift, the gift tax would be the responsibility of the giver, not the recipient.


9

Essentially, your question is "lump sum vs DCA" and your tags reflect that. In the long run, lump sum, say a Jan 2 deposit each year, will beat DCA by about 1/2 the average annual market return. $12,000 will see a 10% return, vs, $1,000/month over the year seeing 6%. What hurts is when the market tanks in the first half of the year and you think DCA would ...


9

Pay off your car loan. Here is why: As you mentioned, the interest on your home mortgage is tax deductible. This may not completely offset the difference in interest between your two loans, but it makes them much closer. Once your car debt is gone, you have eliminated a payment from your life. Now, here's the trick: take the money that you had been paying ...


9

One factor to consider is that some employers have a 401k contribution match policy that only allows a certain percentage of any given paycheck to be matched. So if the company is willing to match 4% of each paycheck, you could run into a problem here where you lose out on some of your company match. For example, suppose you get a $20,000 bonus. You can ...


8

This may not be entirely up to you and your employer. The IRS has rules that classify a job as employment (W-2) or independent contract work (1099) based on facts of how the job is performed and supervised. If you want a particular type of income, you may need to structure the substantive work arrangements accordingly. That said, the IRS seems mainly ...


8

I've done a half a dozen or so of these over the years and not one of them did anything more than send me the credit card once I was approved. While I can't guarantee you that you'll get the bonus, there's no reason to expect that you won't. You applied for their bonus promotion and you were approved. That should mean that it's a done deal.


8

When I was working, my wife and I were both in sales, and our total income averaged about 140% of our "salary". For purposes of a mortgage, banks looked at a 3 year average. Imagine if our entire income were the same, but it was all considered 'commission' or 'bonus'. That would be tough if the bank insisted on seeing a fixed salary only.


6

This is an old question, but I don't see the kind of answer that I would have given. Since the question is still valid for others, going ahead and answering. From my understanding, bonuses are taxed at a flat rate of 25% Your understanding is incorrect. Bonuses are taxed like any other employment income, anywhere from 0% to 39.6% (at the time of this ...


6

It is unlikely that the IRS would allow this. It is in violation of the constructive receipts doctrine. Most employee taxpayers only faced this problem if their employer offered PTO buy-back programs, but effectively the moment PTO became eligible for buy-back it had to be counted as gross income on the W-2, whether employees initiated the buy-back at that ...


6

I had experience working for a company that manufactures stuff and giving products to the employees. The condition was to stay employed for a year after the gift for the company to cover its cost (I think they imputed the tax), otherwise they'd add the cost to the last paycheck (which they did when I left). But they were straight-forward about it and I ...


6

Sure, why not? A signing bonus is just Income with a fancy name, and as such is taxable, and can be used for 401k contributions, just like other income, within the same limitations. The more difficult question would be if the employer‘s 401k plan supports it, but that depends on each employer‘s plan of course.


6

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 ...


6

It can impact your score. If you keep a $1,200 balance on your credit card and only pay the minimum each month, that $1,200 is only slowing going down. That means that you can count on that $1,200 being part of your utilization score. If that $1,200 balance means that you will be utilizing a large percentage of your total credit lines, then your score will ...


6

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 ...


6

At current interest rates, the amount of money is likely to be pretty low. If the tax on the bonus is $10,000, then you might make $100 by having it for an extra year — one year CD rates are around 1% at the moment. You can’t invest it it anything that’s higher risk and potentially higher return, of course, because then you would risk not having enough to ...


5

The bonus of cash or gift will be reported to the IRS under either 1099-INT or 1099-MISC. You are likely to have to pay taxes on the bonus. If the bonus is a piece of merchandise, because they will report the fair market value of the item. If we are talking about bank accounts, there isn't a risk of your credit score being impacted.On the other hand, ...


5

There are a few reasons, dependent on the location of the company. The first, as you mentioned is that it means that the employee is invested in the companies success - in theory this should motivate the employee to work hard in order to increase the value of their holdings. Sometimes these have a vestment period which requires that they hold the stock for ...


5

Looking at your pay statement, it appears they structured this as a loan, which you paid back in 2019 with a "magic bonus". That's a good way to do that. Loans are not taxed Your arrangement had it that you got the $5000 in 2018, but would not keep it unless you started work in 2019. Had you not started work in 2019 (a fact not knowable until 2019), ...


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