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Re: Taxes vs. withholding (was RE: Salary Question: Bonus?)

Subject: Re: Taxes vs. withholding (was RE: Salary Question: Bonus?)
From: "Gene Kim-Eng" <techwr -at- genek -dot- com>
To: <techwr-l -at- lists -dot- techwr-l -dot- com>
Date: Wed, 3 Jan 2007 14:01:36 -0800


----- Original Message ----- From: "Combs, Richard" <richard -dot- combs -at- Polycom -dot- com>

They can call it what they want, but it's not the rate at which your
income is *taxed* (the tax brackets set by Congress -- 10%, 15%, 28%,
etc.), it's the rate at which taxes are *withheld* in a "pay as you go"
*approximation* of the former.

Not to the law, which was also set by Congress.. Legally, the
withholding tax on this week's revenue is a tax you owe *this
week,* not next April 15. But it is true that for most people
who derive their income from regular wages it is a difference
without a distinction.

Only if you *misadjust* your withholding. So, calculate correctly <shrug
/> -- maybe aim for a small refund. IIRC, there's no penalty if your
withholding and/or estimated tax payments equal at least 90% of your
actual tax liability, so you actually have a fair amount of wiggle room.

If you can somehow get your company to tell you what your bonus
is going to be in time for you to make the calculation and get a new
W-4 through payroll in time for the check, then put one in to change
your withholding again before your next check, sure. For most people
it's just not worth the effort. When was the last time you got a bonus
big enough to produce a $3000 refund at the end of the year...?

Gene Kim-Eng.
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References:
RE: Taxes vs. withholding (was RE: Salary Question: Bonus?): From: Combs, Richard

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