Do you guys pay year end bonuses and if so, do you take out taxes?
I know as an employee, that is “income” but how as the employer do you submit the 941 payment to the IRS?
Like if you give a guy $5k, do you give him the net $5k or is it gross $5k with money taken out for taxes?
I know its probably an accountant question but curious how you handle it?
Thanks
Replies
our company does gross with deduction for taxes
Pretty sure you're required by law to take out federal taxes. Rules may vary on state and local taxes.
The one I have been geting is paid out like a regular paycheck, but instead of "salary" it is marked "bonus". And it is caluclated on my performance (how much I suck up to the boss) and the company's performance, so it is not a guaranteed amount.
"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Far as I know do not make it tied to performance in any way, that makes it essentially wages. Make it purely generosity. Do take normal deductions.
Let's not confuse the issue with facts!
Yes, it is just income.
And no problem with the 941. It does not care where or why or who the money was paid to.
Just fill in the blanks with amounts withheld.
The tricker part is figuring the amount of witholding.
If it is a signficant amount and you just use the standard tables for weekly, biweekly, or whatever schedule you use then can over withhold by large amount. Don't know if circular E has an information about figuring bonuses or not.
William the Geezer, the sequel to Billy the Kid - Shoe
This is what I did. I do not figure a bonus should be taxed, so I MAY be bending some rules somewhere.
I took a draw from the company account. I gave the guys cash bonus. I will, in the end, be liable for taxes. I can deal with that in the way company compensates me for my cell phone, truck, and other things.
October 17th, 2009
Jeremy and Lisa
Was there ever any doubt?