Do you have to pay tax on bonuses?

Answer by  Chaneygirl (1755)

Yes. Bonuses are income just like your regular wage. You will pay federal, social security, medicare and any applicable state/local taxes on it. Bonuses are considered an expense by your employer and for them to be able to deduct it, they will need to include it on your W2 form and tax it.

Answer by  Taxmatters (169)

Yes, bonuses are taxable. They will either be reported in block #1 of your W-2 as part of your wages or on a 1099 MISC. If it was paid in cash, but not reported to the IRS, you are still obligated to report the income on your return.

Answer by  km8738 (1917)

You have to pay taxes on just about any earnings you receive whether it is a bonus or not. You will need a 1099.

Answer by  Att4372 (1704)

Payment for work is taxable income. This includes bonuses. A bonus is taxable for the year you have access to any value, which can be cash, merchandise, or stock. If a bonus is kept in an account for FUTURE access, any tax is deferred until you can access it. Example: payments to a retirement plan are taxable AFTER you retire.

Answer by  Kurt (4579)

A bonus is considered compensation and taxable income. If you do not have taxes withheld, it could cause you a problem at tax time.

Answer by  NYC1 (28)

Bonuses are taxable. If you receive a bonus that is not taxed, you will be responsible for the taxes. The rate of taxation seems to vary depending on the employer and the payroll vendor used. Most employers tax bonuses. Some tax as high as 40%, while other tax at the regular tax rate.

Answer by  tamarawilhite (17883)

Yes, you have to pay income tax on any bonuses, as well as social security, medicare (FICA) and unemployment taxes. The only possible exemption is if you earn so little that you do not have to pay income taxes.

Answer by  csj (114)

Yes! You absolutely have to pay taxes on bonuses that you receive. This includes any gifts that you receive from your employer - those are considered cash and you have to claim the prize as income. Many employers that give out bonuses will take out taxes anyways. It's better to pay a little now instead of getting caught later!

Answer by  EarlOfSandwich (177)

Bonuses are taxed exactly the same as wages or salary. Your employer should include them with wages reported on your W2 form.