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If I receive a lumpsum sign on bonus from Amazon, how much of it is taxed? #tech #amazontax
Oh nice to hear. I thought it would be much higher than the marginal tax rate(22% for h1b). In my prev company, it was 40% flat though for annual bonus.
40% flat makes no sense, and neither is the marginal tax rate influenced by wether you have an h1b or so. It's just how much income you make
Most companies use ‘bonus tax’ which is typically around 40% for the withholdings but the actual amount you owe is your effective rate. You will get it back when you file your taxes. They do this because you have to pay 90% of taxes owed in the year. If when you file you owe more taxes b/c of large bonus and didn’t pay in 90% you will pay penalties and interest. To combat this risk most companies turn on bonus tax rates when they pay you.
Amazon’s sign on bonus is paid out over the first 24 months of employment, not a paid out in one shot.
It’s taxes as regular income. So whatever your marginal tax rate is. And you’ll get back a bunch when you file taxes as a refund (unless you edit your W2 withholding to manually rectify this)