Paycheck Manipulation

heybrad · 07-06-2009, 12:10 PM

I had a question I'd like to put to the masses here. Any feedback is greatly appreciated.

I'm due a decent bonus on my next paycheck. The way my work processes the bonus it ends up looking as if that is my regular bi-montly pay which means I get raped on taxes once a quarter. I know I can manipluate my deductions, but they don't seem to have that big of an affect. Is there any implications (or is it even ok) to have our payroll dept mark me as exempt from federal taxes for this one paycheck. I know that carries implications at the end of the year when filing, but since I get these quarterly and I'm usually on top of estimating my taxes, I still won't end up owing at the end of the year.

This is my meager attempt to not give the government an interest free loan.

miked · 07-06-2009, 12:22 PM

Why don't you adjust your withholdings for the rest of the year to make up for the taxes they're gonna take from this?

jbergey22 · 07-06-2009, 12:23 PM

Quote:

Originally Posted by heybrad

I had a question I'd like to put to the masses here. Any feedback is greatly appreciated.

I'm due a decent bonus on my next paycheck. The way my work processes the bonus it ends up looking as if that is my regular bi-montly pay which means I get raped on taxes once a quarter. I know I can manipluate my deductions, but they don't seem to have that big of an affect. Is there any implications (or is it even ok) to have our payroll dept mark me as exempt from federal taxes for this one paycheck. I know that carries implications at the end of the year when filing, but since I get these quarterly and I'm usually on top of estimating my taxes, I still won't end up owing at the end of the year.

This is my meager attempt to not give the government an interest free loan.

This is perfectly fine. I know of people that will claim 10 dependents(without have 10 dependents) because they know they wont have to pay in at the end of the year. Just make sure you know exactly what you are doing otherwise you could end up with a surprise tax return.

Doug5984 · 07-06-2009, 12:26 PM

I do a lot of payroll, and in my software I can set the frequency of the check, and it caluclates the deductions (or I can tell it what to withhold). Now you will have to pay SS & MC, but the withholdings can be manually set at 0 (you will owe it at the end of the year), or you can set them to whatever you want...or you can change the frequency of that one check to weekly, bi-weekly, monthly, quarterly, or yearly- and it will withhold significantly less.

A lot of the people I do payroll for all claim married and 9 (I seriously doubt they all have 9 kids) and have very little, if any withheld. Your payroll person should not have any problem doing that for you

panerd · 07-06-2009, 01:09 PM

I know exactly what you are saying. My school district pays us for activites, summer school, and the regular year all together on checks during the summer. So I get a paycheck (and taxes) the equivalent of like $200,000 a year on a couple of my checks. I guess it all evens out at the end of the year but it is a bit of an annoyance.

kcchief19 · 07-06-2009, 01:38 PM

Aren't bonuses normally taxed at a federal rate of 25%, which with withholding and state taxes would be 40% plus? I though that was an IRS rule, not something you can manipulate. I think it's usually the same with termination payments too.

CU Tiger · 07-06-2009, 02:29 PM

Quote:

Originally Posted by kcchief19

Aren't bonuses normally taxed at a federal rate of 25%, which with withholding and state taxes would be 40% plus? I though that was an IRS rule, not something you can manipulate. I think it's usually the same with termination payments too.

nah commissions are just like regular payments for year end purposes..

dervack · 07-06-2009, 02:34 PM

Why don't you just change it to 9 for this one check and then change it back. That's what I did for my last bonus.

Fighter of Foo · 07-06-2009, 02:38 PM

You can also ask them to give you two separate checks.

lordscarlet · 07-06-2009, 02:52 PM

The ideal thing to do is properly estimate your income for the year and adjust your withholding so that in the end it comes out even. I would recommend http://paycheckcity.com

evil homer · 07-06-2009, 02:56 PM

Quote:

Originally Posted by kcchief19

Aren't bonuses normally taxed at a federal rate of 25%, which with withholding and state taxes would be 40% plus? I though that was an IRS rule, not something you can manipulate. I think it's usually the same with termination payments too.

my bonus is annual and 25% federal is always withheld. it comes in my normal paycheck, but the amount is broken down so my normal pay is taxed at the regular rate the bonus portion has 25% withheld.

OldGiants · 07-07-2009, 03:59 PM

Quote:

Originally Posted by lordscarlet

The ideal thing to do is properly estimate your income for the year and adjust your withholding so that in the end it comes out even. I would recommend http://paycheckcity.com

This is the only advice worth following in this entire thread.

heybrad · 07-07-2009, 05:39 PM

I spoke to payroll and mentioned the 25% thing on bonuses. They found that they had overtaxed my previous bonus so they are going to do an adjustment on this next one so it will all work out in the end.

On a side note... i went to paycheck city before I started this thread and I didn't think the changes in deductions made a whole heck of a lot of difference (a couple hundred dollars).

Thanks for all of the feedback.

Kodos · 07-08-2009, 08:59 AM

Is it Possible to Fudge a Paycheck?

DanGarion · 07-08-2009, 10:41 AM

My yearly bonus is always taxed. It's income... Or am I missing something here?

heybrad · 07-08-2009, 11:11 AM

Quote:

Originally Posted by DanGarion

My yearly bonus is always taxed. It's income... Or am I missing something here?

It's not a question of it being taxed. It's a question of being taxed based on an income bracket that is not realistic (bonus being added with regular pay = being put in a much higher tax bracket than I'm really in). It's about not giving an interest free loan to the government.

DanGarion · 07-08-2009, 11:37 AM

Quote:

Originally Posted by heybrad

It's not a question of it being taxed. It's a question of being taxed based on an income bracket that is not realistic (bonus being added with regular pay = being put in a much higher tax bracket than I'm really in). It's about not giving an interest free loan to the government.

I got ya.

Kodos · 07-08-2009, 11:58 AM

But doesn't it seem like our government could use an interest-free loan right now?

Suburban Rhythm · 07-08-2009, 05:09 PM

Quote:

Originally Posted by Kodos

Is it Possible to Fudge a Paycheck?

All day yesterday, I kept seeing this thread, and thought it might have been a terrible "Can you fudge a bank statement" parody.

07-06-2009, 12:22 PM	#2
miked College Starter Join Date: Jun 2001 Location: The Dirty	Why don't you adjust your withholdings for the rest of the year to make up for the taxes they're gonna take from this? __________________ Commish of the United Baseball League (OOTP 6.5)

07-06-2009, 02:34 PM	#8
dervack College Prospect Join Date: Jun 2005	Why don't you just change it to 9 for this one check and then change it back. That's what I did for my last bonus. __________________ Semi-updated with my ramblings. Semi. But more recently, updated lots. Please check it out and let me know what you think The Year That Wasn't: My Chicago Cubs 2003 Replay Blog

07-06-2009, 02:52 PM	#10
lordscarlet Pro Starter Join Date: Oct 2005 Location: Washington, DC	The ideal thing to do is properly estimate your income for the year and adjust your withholding so that in the end it comes out even. I would recommend http://paycheckcity.com __________________ Sixteen Colors ANSI/ASCII Art Archive "...the better half of the Moores..." -cthomer5000

07-08-2009, 08:59 AM	#14
Kodos Resident Alien Join Date: Jun 2001	Is it Possible to Fudge a Paycheck? __________________ Author of The Bill Gates Challenge, as well as other groundbreaking dynasties.

07-08-2009, 10:41 AM	#15
DanGarion Coordinator Join Date: Nov 2003 Location: The Great Northwest	My yearly bonus is always taxed. It's income... Or am I missing something here? __________________ Los Angeles Dodgers Check out the FOFC Groups on Facebook! and Reddit! DON'T REPORT ME BRO!

07-06-2009, 12:26 PM	#4
Doug5984 College Benchwarmer Join Date: Oct 2000 Location: Louisiana	I do a lot of payroll, and in my software I can set the frequency of the check, and it caluclates the deductions (or I can tell it what to withhold). Now you will have to pay SS & MC, but the withholdings can be manually set at 0 (you will owe it at the end of the year), or you can set them to whatever you want...or you can change the frequency of that one check to weekly, bi-weekly, monthly, quarterly, or yearly- and it will withhold significantly less. A lot of the people I do payroll for all claim married and 9 (I seriously doubt they all have 9 kids) and have very little, if any withheld. Your payroll person should not have any problem doing that for you

07-06-2009, 01:09 PM	#5
panerd Grizzled Veteran Join Date: Jul 2001 Location: St. Louis	I know exactly what you are saying. My school district pays us for activites, summer school, and the regular year all together on checks during the summer. So I get a paycheck (and taxes) the equivalent of like $200,000 a year on a couple of my checks. I guess it all evens out at the end of the year but it is a bit of an annoyance.

07-06-2009, 01:38 PM	#6
kcchief19 Pro Starter Join Date: Oct 2000 Location: Kansas City, MO	Aren't bonuses normally taxed at a federal rate of 25%, which with withholding and state taxes would be 40% plus? I though that was an IRS rule, not something you can manipulate. I think it's usually the same with termination payments too.

07-06-2009, 02:38 PM	#9
Fighter of Foo College Prospect Join Date: Apr 2006 Location: Boston, MA	You can also ask them to give you two separate checks.

07-07-2009, 05:39 PM	#13
heybrad Norm!!! Join Date: Nov 2000 Location: Manassas, VA	I spoke to payroll and mentioned the 25% thing on bonuses. They found that they had overtaxed my previous bonus so they are going to do an adjustment on this next one so it will all work out in the end. On a side note... i went to paycheck city before I started this thread and I didn't think the changes in deductions made a whole heck of a lot of difference (a couple hundred dollars). Thanks for all of the feedback.

07-08-2009, 11:58 AM	#18
Kodos Resident Alien Join Date: Jun 2001	But doesn't it seem like our government could use an interest-free loan right now? __________________ Author of The Bill Gates Challenge, as well as other groundbreaking dynasties.

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