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Like we pointed out prior to, your genuine wages are taxed applying a distinct charge that is based with your tax bracket.
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The IRS determines this employee’s complete owed taxes based on the 12% fee (instead of the 22% fee useful for the bonus), then receives a refund over the bonus since they paid much more than they really owed.
The rationale why is due to the fact bonuses are categorised as “supplemental wages” below IRS tips, which brings about employers to make use of a flat withholding fee of twenty-two% (which is actually prescribed through the IRS) to go over the approximated taxes owed.
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