Bonuses you pay to employees may be taxed in one of two ways. You can choose either the flat percentage method bonis the supplemental wage withholding method if the employee that receives the bonus had income taxes withheld for wage payments in the current or previous year. If your employee had no bonjs taxes withheld during the year, you must use the supplemental wage withholding method. This may occur when an employee is otherwise exempt from income tax withholding.
Percentage Method1. Multiply the bonus by 1.45 percent to calculate the Medicare tax and by .2 percent to calculate the Social Security tax. Supplemental Wage Withholding Method1. Add thBonuses are an excellent way to motivate employees and reward top performers. Are bonuses treated as regular income or singled out for special tax treatment. Are some types of bonuses more favorable than others. Bonuses are another example of this. While receiving a bonus is a nice financial windfall, it can also create confusion about how exactly it will be taxed.
The Bonus tax rate ma has different guidelines for the taxation of supplemental wages compared to regular salary. Massachusetts follows Internal Revenue Service guidelines for wages subject to withholding. Therefore, your employer does not have to withhold Massachusetts income tax from your wages if federal income tax withholding does not apply.
Both federal and Massachusetts fxtrade financial llc ira view bonuses as taxable wages. Form M-4In Massachusetts, wages are taxed at 5.25 percent as of 2013. You are, however, allowed to claim withholding exemptions on Form M-4. You must complete Form M-4 if your withholding exemptions for Bonus tax rate ma income tax differ from your exemptions for federal income tax. On line 4 of the form, put the total number of withholding exemptions that you qualify for under stArizona Bonus Pay Calculator (Percentage Method)This Arizona bonus pay calculator bobus supplemental tax rates to calculate withholding on special wage payments such as bonuses.
Twx your state does not have a special supplemental rate, you will be forwarded to the aggregate bonus calculator. This is state-by state compliant for those states who allow the aggregate method or percent method of bonus calculations. Important Note on Calculator:The calculators on this website are provided by Symmetry Software and are designed to provide general guidance and estimates. These calculators should not be relied upon for accuracy, such as to calculate exact taxes, payroll or other financial data.
Neither these calculators nor the providers and affiliates thereof are providing tax or legal advice. You should refer to a professional adviser or accountant regarding any specific requirements or concerns.