RE: Bonus instead of raise -- why?

Subject: RE: Bonus instead of raise -- why?
From: dthomps -at- foundationsoft -dot- com
To: "TECHWR-L" <techwr-l -at- lists -dot- raycomm -dot- com>
Date: Mon, 1 Oct 2001 16:00:43 -0400

Other respondents have raised very valid points about "compounding" your
raise. But I would also like to raise another, stickier, issue.

I'm not entirely sure if it's legal or not, but I used to work for a company
which paid bonuses in a big amount and did not withhold taxes on them. I'm
not entirely sure of all the technicalities, but I believe because they did
not withhold the taxes, and because it was a "bonus" they saved a lot of
money on taxes on their end (Workers' Comp rates, employer share of FICA,
etc.). In the end, I had to pay all of my share of taxes on those bonuses
at the end of the year. If you don't plan ahead for that, it can be a big
problem! Make sure, too, that you won't be stuck paying the employer share.

Dannette Thompson
Technical Writer
Foundation Software, Inc.
The #1 Accounting Software for Labor-Intensive Contractors
The opinions expressed in this message do not necessarily reflect the
opinions or policies of my employer or coworkers.



-----Original Message-----
From: anonfwd -at- raycomm -dot- com [mailto:anonfwd -at- raycomm -dot- com]

Hello,
I'm a tech-pubs manager at a smallish-sized software company. My company's
annual review cycle is coming around. I have just been informed that --
all across the company -- raises will be handled differently this year.
Instead of getting, say, a 5% raise, we will get the 5% in one lump sum
with the first pay period at which the raise would have been effective.

Anyone know why they might be doing this? Is it to hold the line on
future increases? Are they betting that in this job market, people won't
just pocket the lump sum and leave?

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