What's the tax on sign-on bonus?

New kPBE51
Nov 2 20 Comments

I am starting my job this December and I am to receive 50k bonus on my first paycheck. I had no other income this year. How much do I receive after taxes?
The regular calculator might not help since it's a bonus

@UBER, San Fransisco

comments

Want to comment? LOG IN or SIGN UP
TOP 20 Comments
  • Facebook random_un
    You will get 33,384
    Nov 2 5
    • New kPBE51
      OP
      what happens to the 17k tax if I have to quit and return the sign-on? the sign-on is for 2 years
      Nov 2
    • D. E. Shaw & Co. WXia81
      Unless you negotiated repayment on the net basis, they’ll generally expect you to give them back the gross (pre-tax) amount and then deal with IRS to get the taxes back. This is reasonably easy if repayment happens in the same year that you got the money but can be quite difficult otherwise. In some cases, IRS has even denied refunding taxes. It’s a pretty terrible arrangement that gives the employer a lot of power, especially if you don’t have all that gross lying around.
      Nov 2
    • D. E. Shaw & Co. WXia81
      More info on this subject: https://www.crowe.com/insights/crowe-financial-services-tax-insights/clawback-payoffs-cost-more-than-you-think

      If you can, try negotiating net repayment + best effort to get the balance back from IRS but no personal responsibility for the balance. I managed to do that recently, though it took a lot of convincing, lawyer work, and willingness to walk away over this. Can’t promise the same result. Also, maybe for 17k it’s not worth the trouble.
      Nov 2
    • New kPBE51
      OP
      Thanks. you mentioned, "In some cases, IRS has even denied refunding taxes". What happens in other cases? Does the government repay it as credit? or cash? and what are the requirements to meet here?
      Nov 2
    • D. E. Shaw & Co. WXia81
      If everything works out, it’s a pure refund of taxes paid. Requirements are very much case-by-case, and the link I gave treats the subject with much better justice than I can provide.

      Short story is that it is correct to worry about the tax implications, and that the government is not going to make it easy for you if things go south. In particular, the fact that the clawback period is defined in your contract may be used against you.
      Nov 2
  • Facebook islinger
    Taxed the same, withheld as supplemental income.
    Nov 2 4
    • New kPBE51
      OP
      Do I receive some back at the end of the year? My total income would be 60k in 2019
      Nov 2
    • Facebook islinger
      Correct. Everything is settled up in April.
      Nov 2
    • New kPBE51
      OP
      Is there a way to adjust the withholdings or get a deduction? from that 50k I'd probably receive only 20-25k, which is insane (considering the 28% withholding and other taxes)
      Nov 2
    • Facebook islinger
      Not on the bonus itself, but make sure your W4 allowances are set right. More allowances will reduce withholding on your regular paycheck (do this within reason though, since falsifying this is a crime - I don’t know if they’ve ever prosecuted anyone though).

      Other than that, just file your 2019 taxes earlier (e.g. early Feb) to get the refund earlier (mid-late Feb).
      Nov 2
  • VMware lftl00
    It’s taxed same as base income. If you’ve already met social security tax limits, you’ll save on those though.
    Nov 2 2
    • New kPBE51
      OP
      how can I know if I have met that? my total income would be about 60k for 2019
      Nov 2
    • VMware lftl00
      The threshold is around 130k, so you probably haven’t met it yet.
      Nov 2
  • Qualcomm lo_ol
    It should be around 41%, that includes Federal, State, and social security taxes.
    Nov 2 0
  • LinkedIn transitnoo
    50%
    Nov 2 0
  • New / Mgmt
    evejobs

    New Mgmt

    PRE
    Apple
    evejobsmore
    Following. Does this count as supplemental income or still goes to your base income tax rate?
    Nov 2 1
    • Facebook islinger
      Supplemental income is actually taxed the same as your regular income. If it’s W2 income, it all goes into one bucket, your AGI.

      It’s confusing, because supplemental income is _withheld_ slightly differently, but this makes no difference once you file.
      Nov 2
  • Microsoft ABACADABAC
    Federal withholding of 22% + whatever California withholds.
    Nov 2 1
    • New kPBE51
      OP
      Isn't that like the base salary? 22% federal tax + state?
      Nov 2

Salary
Comparison

    Real time salary information from verified employees