Tuesday, February 28, 2017

BONUS TAXES SUCK!!!


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?


Ok.

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.



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