How does tax work with the Facebook pay sign-on bonuses in California? Is it just considered part of your income? Or is more withheld and until you file your tax return? Will be first time in the to US tax system. How much would you expect to be withheld on a 100k signing bonus?
Expect about 40% to be withheld. So you'll end up with about 60K. That is a mighty good bonus, BTW. Congratulations!
Thanks mate. That's not too bad at all, was expecting more around 50%. So there's no point staggering the payouts for tax purposes? Thanks man, appreciate it, and yeah it's a lot of money to me.
No point staggering the payouts, and I don't think the company will do so anyway. Google does one payout. Not sure about Facebook. In any case, Uncle Sam will take every last penny you owe 😜
It should work out to roughly about 75% or so on the dollar (adjusting for cruelty and stupidity)
Are you really getting 100k sign on bonus? What's your yoe and level?
Its an E4 position. 5 years, but international.
Are you a PhD + 5yoe?
What people have been saying is generally correct, but a bit more detail (and also to head off any confusion that you may have). Bonuses are considered ordinary income to you in the year in which you receive them, and are taxed as part of your income by both the federal government and any state/local governments. However, they are withheld differently. In particular, a bonus paid in 2018 would be withheld at 22% at the federal level and some amount (I think about 10%) by California. (Different rules apply for bonuses when total bonuses in a year exceeds $1M). This withholding number is actually different from 2017 and before due to the new tax law. When it comes time to file your taxes, you may find that you owe tax or are owed a refund. This is because although your bonus is withheld at a particular rate, that is not how you are taxed. I see no reason to spread out bonus payments over this year (2018), as you would incur the entire income in this tax year. There might be an argument to spread it over additional years, but there are some weird details so I would not elect this method without hiring a tax advisor as this can get complicated.
Awesome, thanks for the detailed response. Yeah, I was referring to spreading it out over different tax periods, but as you say it's probably really not worth the hassle. Appreciate it.
OP, is this a SWE position? You mind sharing the offer details? And interview prep tips? And how were the interviews? Leetcode level and design questions. Not relevant though, just for my reference.
I got 59k
Income tax
My concern is that if I accept the entire bonus, it will push me up in to the next tax bracket.
That’s not how graduated tax brackets work