Tuesday, February 28, 2017


Do you know what feels ridiculous? How much the government takes out of your bonus. I just opened up my bonus check and was shocked when I saw it. So while I was still in the heat of the moment I figured that I should jot down my thoughts before clarity and time made me a little less passionate. Normally this is the worst time to write out how you feel about something but I’m going for it. And, no, I do not plan on taking that age old advice of re-reading the email an hour later before hitting send, I’m posting this, raw emotions and all. I'm not even going to edit it, just to make sure I don't decide to change something or change my mind about posting it.

When my boss handed me my bonus check he made a comment about it being $2,400 and change (apparently to a CFO $39 is “change” but to me it’s “$39 freakin’ dollars, score!”). Then there was the off-hand comment about, “Well what Uncle Sam lets you keep of it anyways.”

So when I got back to my desk and opened up my check I was instantly hit with a little ache of confusion and furry when the first number that I noticed on the check was $1,260.84. WHAT! THAT’S HALF OF THE $2,400 (+change) THAT I WAS TOLD ABOUT! I had just been thinking about how my friend who works at the Kroger headquarters makes about $10k less than me but gets an annual bonus of about $10,000, and how I should be grateful for the bonus even if it is 4X smaller than other companies pay out. And I know that I should still be grateful for this bonus because it’s “free” money that I’ve worked hard for. But to see it as half of what you had just expected is a bit infuriating.

Maybe it’s my boss that I should be pissed at. He was the one that build up the $2,400 expectation in my head. But he is also the one that just handed me a bonus check, so no, I’m choosing to be pissed about the bonus tax that gets applied.

And here’s why:
                Normal Paycheck:
                                Gross Amount                   $2,328.61
                                Pre-Tax Deductions           $   669.19
                                Taxable Pay                       $1,659.42
                                Federal Social Security      $   127.59            7.69%
                                State Taxes                        $     39.44             2.37%
                                Federal Medicare               $     29.84             1.80%
                                Federal Taxes                    $       8.44             0.51%   
                                Total Taxes                         $   205.31             12.37%                 

Bonus Check:
                                Gross Amount                   $2,439.00
                                Pre-Tax Deductions           $   414.63
                                Taxable Pay                       $2,024.37
                                Federal Social Security      $   151.22             7.47%
                                State Taxes                        $     70.85             3.50%
                                Federal Medicare               $     35.37             1.75%
                                Federal Taxes                    $   506.09            25.00
                                Total Taxes                         $   763.53             37.72%  That’s over 25% more than usual!

Can someone please explain to me why the government has decided that since this is a bonus they are entitled to take more of a cut from it? This is the part that makes me the most upset. It’s still just money, it’s still just money that I have worked hard for, what’s the justification for the 25% difference?


I’m calming down a bit.

Still pissed – but calming down.

And yes, after looking at the deductions a bit I remembered that the 401(k) contribution is pulled out of my bonus just like any other paycheck, so $415 (or 17%) of that $2,439 went into my 401(k), plus an additional $122 (or 5%) worth of the free company match. 

Now, I need to go kick off my "Bonus/Tax Return Investment Plan" where we pull 10% (~$126) for tithing, invest 45% (~$567) in Vanguard, and the last 45% (~$567) goes to posting down our mortgage principle.


Thank you so much for reading and your help in acknowledging our efforts. If you have benefited in any way from this article could you please help show your appreciation by and support by taking a few minutes to do some of the following ideas:
-          Leave your insights and suggestions as a comment below.
-          Think of at least 1 friend that you think could benefit from this article and refer them to it.
-          Help provide financial support for our efforts by clicking on any of the advertisements on the site. Note that this is a free way for you to help provide us with funding to keep bringing you content. (If you’re looking for the simplest way to help – this is it).
-          Check out another article here.
-          Sign up to get new blog posts in your email here.
You are appreciated,

                Roy Largo

        Band Of Savers Founder

No comments:

Post a Comment