Shannon: How much tax will be withheld from my reenlistment bonus?
I am about to reenlist and I’ve read on a few sites that they automatically withhold 25% which is where my confusion sets in. As I understand it, I will be receive half of my $ 65,000 upfront and the other half over the next 5 years. Will they tax the entire $ 65,000 right away, or only the half I receive upfront? If they tax the entire thing, does that mean I will be double taxed in future years when I go to file my taxes?
Answers and Views:
Answer by Nnnnn Ggggg
Ask your recruiter. You will not be doubked taxed, if you file your taxes correctly.
Only the half you receive upfront at a rate of 20%Answer by the tax lady
If you only get half now, that’s the half that gets WITHHELD at 25%. Withholding is not the actual tax bill.
Your tax bill depends on your total income for the year. That could be 15%, 25% or 28%. In which case refund, don’t owe or owe.
Answer by Bostonian In MOTaxes will be withheld from the bonus as it’s paid out to you. The withholding on bonuses and other irregular payments is set at 25% by law, however the actual tax rate will depend upon your total income for the year. The 25% may be enough, too much, or too little; you’ll settle up with the IRS when you file.
Note that FICA taxes will also be withheld from the bonus payments, as well as state income taxes at whatever level is mandated by your home state.
Your first payment of $ 32,500 will therefore have $ 8,125 withheld for FIT plus $ 2,486 for FICA taxes plus whatever your state requires. Your next 5 annual $ 6,500 payments will have $ 1,625 withheld for FIT, $ 497 for FICA, plus whatever your state requires.
Note: If any of the bonus is paid to you while you are serving in a Hostile Fire Pay zone, that portion of your bonus is tax free as is your base pay and any other normally taxable pays that you receive while serving there. No income tax will be withheld from any of those payments. The combat exclusion only applies to income taxes; FICA taxes will still be withheld.
Answer by acmeravenOnly that portion you physically recieve will be subject to tax in the current year; the remainder as it is doled out over the five year span.Answer by tro
taxes will be withheld with each payment, based on the gross of that payment and yes, more than likely the amount will be considerable
however, this is not to be concerned about because when you file your tax return you very likely will get a good portion of it back as a refund–unfortunately you have just let the gov’t have an interest free loan
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