Read the stuff carefully about the unused PTO - it will be taxed at a higher rate if I understand it. So....you may want to consider taking PTO before the cutoff date of Sept. 23. They freeze the stuff on Sept. 15. I get fuzzy on the specifics but wanted to highlight that and perhaps get some insight.
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I’m a CPA and also work at Cisco. I provide tax planning and tax return services as a side job. The 22% you see is the withholding rate, not your actual tax rate. By the end of the year, your total income will determine your final tax rate. I recommend not taking any PTO until the cut-off date so you can accumulate more. Even if you end up paying some tax, you’ll still have extra take-home income. Unless necessary, I don’t see a reason to take more PTO just to avoid tax.
I don’t get people that will give up taking money because they get taxed more.
Everyone’s tax situation is different. Instead of scaring everyone, call a tax accountant.
It's not taxed at a higher rate, it's got a higher withholding. If it's more than your nominal tax rate, then it'll show up as a return come tax season. Please double check before posting stuff like this, it's extremely misleading.
Can you apply the PTO payout towards 401k?
If everyone went on PTO to use it up, it would be funny.
Who doesn't understand tax returns 100?
If you vote blue or plan to vote blue, you can sit this one out.
Amazing how financially uneducated some people could be
Normally the tax withholding rate is determined by annualizing the gross payment amount and applying the information from your W-4 form.
Most people will get slotted into the 22% or 24% withholding rates for the federal taxes and whatever the corresponding rate is for your state.
If you get zapped above that, you'll get it refunded to you when you file your taxes next year.
Things to watch out for (especially if you are like some folks who are at or near their PTO max):
- Overpaying your FICA withholding (not a biggie, it'll get refunded to you when you file your taxes but your tax preparer might pause and scratch their heads because it doesn't happen very often)
- If you have deductions for your 401k contributions (you might max out your contribution but if you do, you can call benefits and see if you may be eligible to contribute to another retirement vehicle or your age allows you to activate the catch up contributions).
It's considered supplemental income and as such is taxed at 22%.
It's on the page with the info about the payout... did you miss that?
I think that’s the withholding rate not the rate it’s taxed at. The rate it’s taxed at is determined when you filed your taxes and in many cases it will end up being ordinary income which means if it ends up being taxed at a lower rate you’ll see the difference back on your refund. Same as with bonus pay.
Don’t confused the withholding with what you will actually pay in tax.
Federal will be 22% plus whatever state tax is applicable.
Almost sure it does get taxed at a higher rate. Similar to a bonus, which is A.LOT. Guess there is no way to opt out of that one?