I'm not sure where to post this so feel free to move this if needed.. anyhow, A few nurses I know were asked to sign on for a years contract at the hospital they work at to assure people not leaving to go elsewhere. Anyhow, they were offered a 2,500.00 stay on bonus. They did this and a few months later they got a letter from personal saying now they owe 1,000.00 in taxes on this amount. They said they can take it all out at the end of the year or take it out over a period of ten checks of 100.00 each. Now my friends are outraged...they said they now only get 1,500.00 to stay the year? How come they have to pay such a high tax rate on this? Is this legal? Thanks for any answers...

$1,000/$2,500 = 40% This is an exorbitant tax bite, but it definitely covers all taxes and other deductions (Social Security, for example) of most, if not all, of the nurses. Yes, this is legal for a lump sum payment. Think positively: when you do your taxes, you will likely be getting part of the money refunded, unless you owe money.

Keep quiet. Be thankful that you are working. I am not and owe multiplied times what you got for next to nothing. Instead, focus on the message, which is that it would cost at least $2,500 to replace you.

You sound like ingrates, looking a gift horse in the mouth. However, I think that you all can benefit from reading some literature on taxation. Considering the kind of money you all appear to be making, where have you been on such topics as reducing your tax bill and making investments? Consider the experience a wake-up call!

Being more than a bit harsh, aren't you tseab? You have no idea what kind of money she is making (notice that she is not talking about herself, here). You also have next to no idea of what her friends are making, other than that it is more than $1,500 after taxes for a year.

Sam - 40% tax does seem unreasonably high (I've never know a nurse in that tax bracket), but I can't say for sure without knowing a lot of other details (even then, I really couldn't say, but a trained accountant could). They should talk to an accountant to make sure that there wasn't some sort of screw-up.

Thanks Methos and I was more than shocked at the post I had gotten on this.. Jeeze tseab put your glasses on!

anyhow No methos they don't make that much to put them in a 40percent tax bracket is the point..I thought maybe this is seen as a gift and taxed more or something? I don't know they are still trying to find out why they were taxed so high. I guess I was just trying to find out here if there is a special tax or something on this kind of money to make them take so much? Thanks Mike I appreciate your response.

I couldn't track down a link to the actual law, but I have been (unpleasantly) surprised by this same thing in the past.

I have come to expect that whenever I get a bonus that roughly 50% will be held back for taxes. Someone explained to me once that whenever a bonus is issued, with-holdings are deducted by the federal, state, and local governments at the HIGHEST possible marginal rate. It always bothers me too......

And, I never really take comfort that I might get some of it back come tax-return time - it was my money to begin with and I would rather have it now!

Samantha: Go pay an accountant. Find one who is my age (54) with my degree (M.B.A.). I promise you that you will get the same kind of an answer. After all, they do have clients with real problems. Now, again, when are all of you going to learn how to most favorably handle your after-tax incomes? There is literature available on the subject for those who do not even know that when you make $1,500 on top of your regular salary in a payroll period that you get taxed like the rich. Businesses are supposed to stay with one accounting method to accommodate the IRS, not its employees or even itself.

I use glasses for distance. Maybe that's why I am asking (all right, telling) you to get cracking about what you will do with your take home pay in the distance, when it will be a lot higher. You should thank this cranky (acting) mother hen for the wake-up call. Sheesh.

P.S. Ol' tsaeb likes to have her fun every so often. Also, tsaeb's sister is a retired nurse, who was making good money upon retirement.

methos5000: Gee, I read your profile, and you sound so smart.

tseab - I would have left this to the experts(since it is not an area I'm an expert in), but I felt the need to balance out your, bitter, insulting, and inappropriate reply to a topic that you didn't read carefully enough to even know who received the bonus. there is something to be said for a minimal level of tact.

---

PS - Thank you Pberger for your helpful, informative, and polite reply.

[This message was edited by methos5000 on 09-18-03 at 12:00 AM.]

The reason that lump sum payments are seemingly taxed so highly is that the table used to figure withholding assumes that the taxpayer is getting paid this amount (regular pay plus the one-time bonus) every paycheck. If one has their withholding matched perfctly to their actual tax debt, the overage (overpayment) will be refunded with the next return. The other side of the coin, so to speak, is a pay period in which one works less that the norm. The tax amount paid that pay period is less than usual. (Has anyone ever complained about that?) It really does work out the same at year's end. Another reason that your friends may be so upset is that they were probably seeing $2500 in their pocket, not thinking about taxes. When you take the normal rate that they pay out of the $2500 and compare it to the $1000 that they did pay, the difference is not nearly as great as it seems here.
What one can do IF one knows that such a bonus is coming is to change the withholding for that pay period. That needs to be done as soon as possible, though, because a large business such as a hospital does not do these things overnight. The change of withholding form probably needs to travel through a few departments to the outsourced accountants.

While I am the same age, I do NOT have an MBA, and one is not necessary to figure this problem out.
Tseab, possibly you could benefit from this link.

[This message was edited by Doriangreyed on 09-18-03 at 12:52 AM.]

methos5000 & Doriangreyed: Tsaeb cannot be insulted by people who 1) express shock at the truth, 2) repeat tsaeb's answer in a variety of ways, 3) think themselves so superior to tsaeb, and 4) MISS THE POINT. The point is not about tsaeb trying to entertain people who do not know a joke when they see one, but the point is about PEOPLE WHO CONTINUE TO 1) FAIL TO RECOGNIZE THAT THEY DO NOT KNOW WHAT MOST PEOPLE WHO WORK FOR A LIVING SHOULD KNOW and 2) EXPRESS SHOCK AT THE HEAVY-HANDED IMPLICATION THAT THEY LEARN HOW TO HANDLE THEIR MONEY BEFORE THEY ARE RIPPED OFF FOR THE REST OF THEIR LIVES. I find you two folks nasty, not for your comment/suggestion to tsaeb (which tsaeb, who has a sense of humor, expected), but for what you failed to suggest to Samantha--that she learn ASAP how not to do nothing and thereby continue to get herself ripped off by such know-it-alls as you. You pretend to be her friend and leave her in the dark. Shame on you! Never mind trying to "reform" tsaeb! If Samantha has a friend here, it is tsaeb, who had the guts to tell her what she truly needed to know. Anyway, judging by the number of views of this topic, it is about time that someone livened up this business section. Now, if you don't mind, I will return to the religion forum.

Samantha: I think that you are a good sport. No, I don't think that you are stupid, only too young, nice, and vulnerable. Read about money management, etc. P.S. I think that you know to stay on good terms with the accounting department, which prepares your checks, or to not go around foolishly changing your withholding, unless you plan on leaving it that way. Well, you would have to read to learn what withholding you should be claiming, right?

[This message was edited by tsaeb on 09-18-03 at 05:20 AM.]

And tseab still hasn't figured out who got the bonus.

Sam asked a question for a friend, and your response was, instead of explaining what happened, to criticize her for even wondering or having the gall to ask and to call her and ingrate. Thankfully, DG and Pberger decided to actually attempt to inform her instead of lambasting her. As I said, there is something to be said for a minimal level of tact.

Methos, there really is no need to try to explain to Staeb where she made her several mistakes. I remember an instructor I had (Psych 256- Abnormal Pych) that said that there was really no way to rationally deal with people who refer to themselves in the third person, that they either understood or didn't, and nothing would change that. Failure to see what is written before one seems to validate that statement. ( He also mentioned associated messianic tendencies, bit I don't remember all of that part.)
Sammy, since Staeb still has no idea that you do not work and are not part of that group, you can see the 'value' of her learning and, thus, her advice. (But her comment about reading to learn was funny, wasn't it, considering she hasn't learned who had the problem?)

LOL@ Dorian...thanks guys for what you explained on here. I did talk to them again and they said that they heard the hospital listed this as a gift to be able to possibly be exempt from paying any SS benefits on this or something..I appreciate all your answers and thank you Dorian and Methos for coming to my "defense" and being the good friends that you are.

Quotes from tsaeb:

"Keep quiet. Be thankful that you are working. I am not and owe multiplied times what you got for next to nothing."

"Go pay an accountant. Find one who is my age (54) with my degree (M.B.A.). I promise you that you will get the same kind of an answer. After all, they do have clients with real problems. Now, again, when are all of you going to learn how to most favorably handle your after-tax incomes?"


Perhap tseab should reassess her learning skills herself. An MBA and 54 years of wisdom but you owe many times this amount and you are not working? hmmm....think I'll look for an accountant who can handle thier own money a wee bit better.

Samantha: Tsaeb's experiment is a success. I was testing to see how many dogs I could so easily attract with a little venom despite my good advice given. There are still ingrates lacking in humility who are a dime a dozen participating here. So, Sammy, what do you do for a living, since you do know that when all else fails, use charm? With 6667 posts, I know that you have not been reading up on what to do with your money. Also, did I detect a thank you which included me?

methos5000: "Sammy's" profile lists her as a registered nurse.

Doriengreyed: Since you changed my nickname to Staeb, I would not trust what you might do to numbers. Also, your profile lists you as only three years old, and you claimed to be my age. Finally, there is no need to make insinuations against believers.

gatman: You missed another point. Anyone who can survive as a high risk taker as well as I do must know something. Actually, God is watching over me.

All: We had better stop using this thread for chat lest we all be censured. Bye.

[This message was edited by tsaeb on 09-19-03 at 07:06 AM.]

"Doriengreyed: Since you changed my nickname to Staeb, I would not trust what you might do to numbers. Also, your profile lists you as only three years old, and you claimed to be my age. Finally, there is no need to make insinuations against believers." - Tsaeb
First, let me apologize for typing your name wrong; the TS combination at the beginning of a name is not one I am used to in English. But that was a typo. You stated that my profile lists me as only three years old. It does not. One who makes such errors may benefit from reading how dates are written using numbers only. You may find such literature in your local elementary school. Regarding your trust, you are right not to trust me, just as Sammy is right to have trust in me. One of the things I learned in that class was that what is said to "Third Person Speakers" rarely makes a difference to them, so I operate on that system. (I was also taught they they often typed in all caps.)
Berkowicz was a believer, too, as was Jones, Koresh, and others. We all believe in something. I believe in using standard English.
By the way, Sammy thanked those who helped her.

Sammy- As I told you, her explanation of why those nurses had that taken out was, at best, incomplete. Having done payrolls before, I know that my explanation is correct.

Gat- Good point, but wasted here, except for those that understood the problem in the first place.

Methos - Yes, I read some of that which we talked about, and you are right; it all fits. It is almost a classic case, actually, even down to talking about giving 'tests' for others, who invariably fail, thus, reinforcing the beliefs. It is nice to know that my textbooks were so good.