How Your Bonus is Taxed

December 28, 2018

There is no question how complicated dealing with your taxes can be. You really need to understand the entire process to handle your taxes personally. However, even someone who knows what they are doing may find some complications they do not know how to tackle. For instance, if you received a bonus during the year, do you know how it is supposed to be taxed? This seems like a simple question at first, but there are a few aspects that can make it more complicated to answer. It may be simplest to turn to Los Angeles tax advisors to take care of your taxes. Encino tax consultants can handle your return, as well as all the little aspects you may not know how to handle.

How To Tax a Bonus

There are two ways a bonus may be received and the way it is taxed depends on which method is used. Sometimes, employers may write a separate check and other times the bonus may simply be added onto the latest paycheck. You nearly always want your bonus to take the form of a separate check. This method makes the bonus supplemental wages, which means it is taxed a flat 22 percent in 2018. If the bonus gets added onto a paycheck, then it must be withheld at a rate according to the amount of the bonus and paycheck together, which is usually higher. Additionally, this may push you into a higher tax bracket, which can further complicated matters.

Find a Tax Consultant

The right Los Angeles tax advisors for you should handle

• Tax Return Preparation
• IRS Audit Representation
• Estate and Gift Tax

When it comes to taxation, you need to be confident that you filed correctly. For most individuals, this can be an intimidating process. To be absolutely certain that you did not make any mistakes, select your Los Angeles accounting carefully.