Anyone know how to adjust Federal tax withholding in Workday? More specifically, before Trump changed tax laws we were able to adjust federal exemptions for any given pay period.
In turn this adjusted the tax withholding. The reason I ask is because I have a significant bonus coming soon and I don't want to get taxed at max since I am not in top tax bracket. I don't like getting a federal tax refund, would rather get the $$ on my paycheck so govy doesn't get to invest it.
9 replies (most recent on top)
You can’t alter the bonus tax rate, it’s 22%. Any adjustments to withholding will only impact your regular earnings.
@fzd+1kTOzpF1 - the bonus may push you into a higher tax bracket. This is likely why you paid extra taxes for it in addition to the response from @uak+1kTOzpF1 and having the income fall into another taxation category.........
moral of the story is "You make more, You pay more taxes to "equalize" you". Don't cha love how equity devalues those with experience, performance, and talent :-)
a little too - if you request to not have any taxes taken from your bonus and put all of it into an asset like a new house, boat, tv, land, or even the principal of your mortgage then you won’t have to pay taxes until that asset is sold. Also a lot of states will waiver those taxes if you don’t sell after 7 or 10 years. So basically take your bonus buy apiece of land, hold it 10 years then make a profit and sell it.
talk to your accountant first to make sure your state laws lines up with this.
1/20 was deadline to alter 401K withholding from bonus.
No matter what you do with your withholding, the govt. gets the same % out of bonuses (unlike regular wages where it varies by bracket).
Your bonus is buying tanks for Ukraine, sorry.
Thank you @uak+1kTOzpF1 for the response, I trust your judgment seeing that you are in payroll. I looked at my paystub from last year when I got my bonus and had almost 6% more deducted in federal taxes versus my other 25 pay periods for the years so IDK
https://www.nerdwallet.com/article/taxes/bonus-tax-rate-how-are-bonuses-taxed
Sorry - 22% for the plebs.
All bonus payments have 28% fed tax withholding. Has been this was forever. Pre-tax deductions like 401k have no effect. State tax is usually higher on bonus payments as well.
I’ve worked in payroll since the late 90s - part of the reason you see your bonus called out as a different earning category on the pay stub is to kick in the required bonus tax calculation.
I understand the cut off to make the adjustments was last week.