Yearly Bonus Ripped Off?

Nurses General Nursing

Published

So at my local hospital, nurses are getting a yearly bonus. But, I guess the IRS taxes the hell out of them. Up to 40 percent of their bonus is gone! Do you think this is crazy? A bonus is payment that a nurse earns, and it should not be tampered with! Maybe someone with more experience with taxes can explain why this happens.

Specializes in Education.
What term is racist and offensive?

It doesn't matter what the term is, that's not what this thread is about.

On the topic of bonuses and taxing them...a bonus is a bonus is a bonus. If the hospital says that they're giving everybody $500, but I only see an extra $100 on my paystub, that's still more money than I normally would have gotten. Would the full amount be nice? Yes, but at the same time something is better than nothing.

No, the question to be asked is: what is to be done with that extra money that you do get? Bills? Massage? Rainy day fund?

Specializes in Critical Care.

You need to change your w4 withholding so less is taken out for taxes. You are lucky to be getting a bonus, where do you work? Most places only offer a bonus to new grads in the past and for working nights or extra for a time. Not even a Christmas present, yet alone a bonus! How do you rate. lol

Specializes in LTC, Acute care.
On the rare occasions we get a bonus we have enough warning to change withholding for that pay period. So for the bonus check pretty much everyone changes their deductions to 9. Then you have to remember to change it back to your normal deductions or tax time will be a big ouch!

Wow, my workplace does the opposite. The people who had been there for a while told us they used to do that (manipulate the deductions just for the bonus period) but this year, administration sent out an email warning people not to do that. I wish they could pay it on a separate check or something. Ours you have to have done well on your evaluation, the hospital has to have met its goals and you have to have worked so many hours that year before you can qualify for the bonus. Last year, it was a certain percentage of what your gross pay, so people would pull overtime so their bonus would be more but that was eliminated this year. Instead it was now based off people's scores on evaluations. The reason this was 'bad' was because staff was not told as they racked up all these hours- while they dreamed of the nice things the bonus would get them-that there had been a change. So naturally, people felt cheated by the hospital. Anyway...

Specializes in Med Surg.
That's great that the federal taxes are that reasonable. That doesn't include state taxes, though. So I'm paying 25% in federal taxes and another 7% to the state. That is nearly a third of my income gone to taxes and we haven't even looked at what I pay to Medicare or SSI yet. If someone did have a paycheck that was substantially higher than usual, it will have more money in taxes taken out. Yes, some of that will likely be gotten back when filing taxes, but it's still painful to watch when it happens.

The tax rates are AFTER deductions. You are not paying that rate on all your income and your effective tax rates are lower.

That being said - and in direct contradiction to other claims in this thread - bonuses are taxed as regular income. No more. No less. So if you get a bonus, your pay increases.

The fact that so many middle class taxpayers have their undies in a bunch OVER GETTING PAID MORE MONEY is a clear testament to rich conservatives who have them fooled into thinking "the government takes their extra money."

Specializes in Med Surg.
The state taxes is where I lose most of my bonus. Between the state and federal taxes combined, about 40% of it is gone. Then they take out the Medicare and SS as well. So that's about where the other 10% goes.

A $500 bonus turns into $250 at the end of it all.

It is $250 I wouldn't have had before so I'm not bitter or angry. Just confused as to why they can't put it in a separate check.

I'll probably use the money to get my husband something nice for Christmas because he is putting up with me through nursing school.

Your effective tax rate is not 50% For goodness sake, this is NOT that hard to look up.

Social Security tax is 6.2% (up to $117,000). Medicare tax is 1.45% on all earnings.

For the rest of your taxes to add up to 43% your household income would need to be WELL OVER $405,000.

It isn't. You know it isn't. So please stop telling people it is.

Specializes in SICU, trauma, neuro.

I get that it smarts looking at the gross and net on your pay stub, but at the same time 60% of a bonus more than nearly all nurses get. It's the IRS. It is what it is.

Specializes in OB-Gyn/Primary Care/Ambulatory Leadership.
That being said - and in direct contradiction to other claims in this thread - bonuses are taxed as regular income. No more. No less. So if you get a bonus, your pay increases.

No, again, bonuses are considered "supplemental wages" by the IRS, and as such MAY be taxed differently, depending on how the employer handles it (but if it's taxed differently it's not 40%, as others have claimed, but a flat 25%.

See IRS publication #15, section 7.

Specializes in Geriatrics, Dialysis.
Wow, my workplace does the opposite. The people who had been there for a while told us they used to do that (manipulate the deductions just for the bonus period) but this year, administration sent out an email warning people not to do that. I wish they could pay it on a separate check or something. Ours you have to have done well on your evaluation, the hospital has to have met its goals and you have to have worked so many hours that year before you can qualify for the bonus. Last year, it was a certain percentage of what your gross pay, so people would pull overtime so their bonus would be more but that was eliminated this year. Instead it was now based off people's scores on evaluations. The reason this was 'bad' was because staff was not told as they racked up all these hours- while they dreamed of the nice things the bonus would get them-that there had been a change. So naturally, people felt cheated by the hospital. Anyway...

Wow, that sucks! Since there is nothing illegal about changing with holding for a check, why would your employer not allow it? And tying any bonus to an eval rather than basing it on hours worked is lousy. What do you bet that if bonuses and/or raises are tied to an employee eval that nobody gets a great eval even if one is deserved.

Specializes in ER/Emergency Behavioral Health....
Your effective tax rate is not 50% For goodness sake, this is NOT that hard to look up.

Social Security tax is 6.2% (up to $117,000). Medicare tax is 1.45% on all earnings.

For the rest of your taxes to add up to 43% your household income would need to be WELL OVER $405,000.

It isn't. You know it isn't. So please stop telling people it is.

Not every pay is taxed like this. But about 50% of my BONUS is taken out with taxes.

If you would like me to screenshot my pay stub for you I will. It is pretty pitiful though, and may hurt your eyes.

Specializes in hospice.
You know what's not taxable income? The billions in earnings from stocks etc from the fat cats in Wall Street.

Haven't you ever heard of capital gains taxes? Those are indeed taxable.

PS I have a 401K and so earn money from Wall Street. So do millions of nurses, teachers, factory workers, retail employees, retirees........ you might want to think about that before trying to inflict too much damage on the "fat cats."

Specializes in Critical Care, ED, Cath lab, CTPAC,Trauma.
Haven't you ever heard of capital gains taxes? Those are indeed taxable.

PS I have a 401K and so earn money from Wall Street. So do millions of nurses, teachers, factory workers, retail employees, retirees........ you might want to think about that before trying to inflict too much damage on the "fat cats."

Yes it is taxed but at a much lower rate the your average Joe with opportunities to sheltered in tax deferred annuities.

Specializes in CEN, CFRN, PHRN, RCIS, EMT-P.
Haven't you ever heard of capital gains taxes? Those are indeed taxable.

PS I have a 401K and so earn money from Wall Street. So do millions of nurses, teachers, factory workers, retail employees, retirees........ you might want to think about that before trying to inflict too much damage on the "fat cats."

So cute how you defend the overlords... Do you know you we pay taxes at much higher rates?

+ Add a Comment