Delta/Endeavor SSP Extended to All Pilots

adk said:
This. Whenever people insist that bonuses are taxed at a separate rate I ask them to show me the box on their W-2 for bonuses.
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I don't know if the rules change once a person is making $$$$$, but in the lower middle class tax bracket I currently fit into:

I know for a fact that retention bonuses in the Army get taxed at a 25% rate. You don't necessarily get any of that tax back after you file your return unless you get some of it back as part of a refund of your overall total taxes paid. Not sure about the "interest free loan to the government" mentioned above. It's only an interest free loan to the government if you pay more taxes than you owe in general for the year and wind up getting a refund, so there's nothing special about a bonus vs taxes on regular income and what you get back in a refund. In the Army, if it gets withheld at a rate higher than 25%, it means someone goofed in the pay system or maybe your W4 was filled out wrong. I would be talking to accounting/ payroll/ finance office if that bonus got taxed more than 25%.

It's the same tax rules for Army bonuses as the civilian world. It's just lumped in like it's extra pay. There is no breakout of what money got taxed at what rate on the W2 for it though. You get a single W2 for the year with regular income and your bonus lumped in. Individual paychecks (called "leave and earnings statements", LES in the Army) do have more of a breakout of info, and it's easier to see the amounts withheld and figure tax rates that were assessed for a given set of money from one of those.

Anyway, on your W2 every year, you will see the that the value of the bonus was added in your gross income box, but you've got to do your own math to figure out what that total gross income number means. For the withholdings, if you work the math on scratch paper you will figure out that the withheld taxes box will include 25% of your bonus plus whatever the rest of your normal income taxes on the rest of your Army check are.
 
So for my income taxes, the total gross pay gets calculated with the bonus included. But when my taxes get calculated, the total income tax gets figured out using the government's scale.

http://www.bankrate.com/finance/taxes/tax-brackets.aspx

The bonus itself, however, already had taxes withheld at a 25% rate regardless of whatever tax brackets will apply to the rest of my income once all sources from the year were added in. Hopefully things work out so that the total money withheld for taxes was more than I owed for the year.
 
Beefy McGee said:
So for my income taxes, the total gross pay gets calculated with the bonus included. But when my taxes get calculated, the total income tax gets figured out using the government's scale.

http://www.bankrate.com/finance/taxes/tax-brackets.aspx

The bonus itself, however, already had taxes withheld at a 25% rate regardless of whatever tax brackets will apply to the rest of my income once all sources from the year were added in. Hopefully things work out so that the total money withheld for taxes was more than I owed for the year.
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I think we're saying the same thing. Generally, bonuses are always subject to 25% federal tax withholding. If you're a 777 captain, you'll probably wind up owing more. If you're a CRJ FO, you'll probably end up owing less.
 
@Beefy McGee, a withholding is not the same thing as an actual tax. The withholding is just done as a best estimate of what your tax liability is going to be for the year so that you don't end up owing money at the end of the year. The actual tax rate on the bonus is no different than your normal income, which is why it's all in the same box on your W2. The government doesn't care whether the money came from salary or bonus. It's all taxed the same in the end.
 
ATN_Pilot said:
@Beefy McGee, a withholding is not the same thing as an actual tax. The withholding is just done as a best estimate of what your tax liability is going to be for the year so that you don't end up owing money at the end of the year. The actual tax rate on the bonus is no different than your normal income, which is why it's all in the same box on your W2. The government doesn't care whether the money came from salary or bonus. It's all taxed the same in the end.
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Yeah, you are right, I am mixing up my terms. Tax vs withholding. I understand the difference but am messing up my comments on here. You can tell I don't have a good finance background, but at least I am learning stuff from you guys. These discussion threads are teaching me a lot or correcting my knowledge a lot, which is a good thing. I seem to currently know enough to be financially dangerous. Haha

Warning to others on here: Don't trust my financial advice or level of understanding. I was an engineer, Soldier, and now pilot. My advice is to listen to @ATN_Pilot and @drunkenbeagle, they seem to know what they are talking about in financial matters, not me. Wait, can you trust my advice on that advice? Dang. Wait. Er...
 
BobDDuck said:
I think the confusion often comes from the fact that a bonus can bump your "income" up enough to put you into a higher tax bracket and people see that and associate it directly with the bonus.
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When you go into the next tax bracket, only the dollars above that tax threshold are taxed at that amount.. not your entire income.

I'm not saying you don't know this... just some don't seem to grasp this concept.
 
PeanuckleCRJ said:
When you go into the next tax bracket, only the dollars above that tax threshold are taxed at that amount.. not your entire income.

I'm not saying you don't know this... just some don't seem to grasp this concept.
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Unless you move into AMT territory...

But yep, a ton of folks think they'll take a pay cut with taxes if they make more money. On the same line of thinking of "I can't quit my commuter, I can't afford the pay cut..."
 
wheelsup said:
Unless you move into AMT territory...

But yep, a ton of folks think they'll take a pay cut with taxes if they make more money. On the same line of thinking of "I can't quit my commuter, I can't afford the pay cut..."
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Exactly. I'm at ExpressJet, but I had a captain swear up and down that if I made $49,000, I paid $10,000 in taxes. But if I made $50,000, I paid $15,000 in takes. Now these numbers aren't real, just an example of what he though. If you look at the actual numbers, there is an area where it's somewhat of a break even point. It's a very small number, only about $500 where if you made that $500 more, you would have the same amount in the end of you made $500 less. If you worked more, you still had more into you pocket after taxes.

I was bored one day and made an excel spreadsheet that showed all of this. It went by every $1,000, and it showed the tax liability due at every earned $1,000 up to $300,000. Maybe I should make this again?
 
For 2015 for filing as a single.
Single_rates.png
 
Totally off topic...anyone know where I can list to sell some uniform items. I just resigned from Endeavor and have a never worn captains coat if someone is interested
 
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