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Category: Income and Investments Tags: , bonus, income taxes, Taxable
by joshritchie December 9, 2011

** Bonus Time: How Bonuses Are Taxed and Treated by the IRS **

Employers love supplementing wage and salary income with bonuses. It’s an
excellent way to reward top performers and motivate employees to do more
than the bare minimum. Yet bonuses can quickly change one’s tax return
depending on the size of the payout, the pertinent IRS guidelines, and how
employers choose to handle it. Are bonuses treated as regular income, or
singled out for special tax treatment? Are some types of bonuses more
favorable than others? And are there any ways to minimize the tax impact of
getting a bonus?

These questions are explored below:

*Bonuses Are Considered “Supplemental Wages”*

Bonus Taxes

Bonus Taxes

If you read the tax code, you will notice that the Internal Revenue Service
goes to great lengths to categorize different types of income and treat
them differently. Bonuses are another example of this. In the eyes of the
IRS, bonuses are typically categorized as “supplemental wages.” As a
University of Minnesota summary explains:


“The IRS defines supplemental wages as compensation paid in addition to
the employee’s


how are bonuses taxed

How Is Bonus Income Taxed? | eHow


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1. eHow
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3. Tax Information
4. General Tax Information
5. How Is Bonus Income Taxed?

** How Is Bonus Income Taxed? **

Faith O

Faith O has covered politics and general news in Washington DC, Chicago and
Maryland. Her writing has appeared in the Associated Press, Prince George's
Sentinel, Northwest Indiana Times, Chicago Defender and Daily Southtown,
among others. She has a Masters of Journalism from Northwestern
University's Medill School and a Bachelor's degree from Hampshire College
in Amherst.

By Faith O, eHow Contributor , last updated November 25, 2012

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1. *Overview*

· If you get paid a bonus, the IRS will want their share too.If you get
paid a bonus, the IRS will want their share too.


· A bonus is payment to an employee over and above his normal
compensation as a reward for a job well done. Some companies base this on


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