Newsflash: EDIT** I was wrong about bonus taxes but I'm still right about the rest :)

[Hello_Kitty]

At my old job, where I worked from 1996 to last year, I usually got a bonus of anywhere from $2 to $5K, depending on how good business was that year and several other factors. Whatever it was, I knew that the IRS would take 50% right off the top of it. Granted, 50% is less than 90% but it's still a big friggin tax and my ordinary tax bracket wasn't anywhere near that. So I suppose that means I was "unfairly targetted" with a tax because I got a bonus. Well okay, but I took was left after the taxes and was happy with it because, guess what? It was a bonus.

But still:

Enough with this bullshit about how taxing the AIG bonuses is an injustice, or even more absurdly as some people claim, illegal. It's not a bill of attainder because that pertains to criminal law, not taxation. It's not a violation of ex post facto law either since the SCOTUS upheld retroactive taxes (unanimously) in United States v Carlson in 1994. Can we pleeeeeease put a rest to the DU Wrong Ass Talking Point Du Jour about how the AIG bonus is an ominous depredation on civil rights?

Thank you.

H_K

[Gman]

1. Every bonus I ever got was an average 35% taken out for taxes

along with Medicare, FICA and union dues.

[Hello_Kitty]

8. Between federal, state, and payroll taxes they took about 50% of mine.

I probably should have clarified it was total taxes, but still. People are acting like taxing a bonus at a higher rate is this horrible, horrible unconstitutional thing when that's just ridiculous.

[Nye Bevan]

2. Your bonus *should* have been taxed no higher than your other income

Your total income, salary plus bonus plus anything else, minus deductions, should be your taxable income. The bonus should not have been taxed any higher than the salary. Perhaps the witholding was higher, but that should have been taken care of when you filed your tax return. Did you file a return for those years?

[Hello_Kitty]

5. That's not how it works. Bonuses are taxed separately.

After I filed with all my deductions I only started getting some of it back after I bought my house. When I was renting I didn't have the mortgage interest deduction and my standard deductions weren't sufficient to recoup any of it.

[The Straight Story]

3. So are they already taxed at a high enough rate?

:shrug:

[RB TexLa]

4. You bonus was taxed at the same rate as your other income, it was withheld as if that

amount was going to be your pay for all of the yearly pay periods. When you filed your taxes it fell under the rate you paid, you just had extra paid in from that check.

[Hello_Kitty]

7. No it wasn't. It was taxed at a separate tax designation.

I typically got roughly 50% of whatever the total bonus was. When I filed taxes at the end of the year those taxes went into the total I paid and it wasn't until I owned a home that I got any of it back because I could deduct mortgage expenses. At any rate, the same would apply to the AIG execs. When they file their taxes and take their (probably considerable) deductions they will get some of it back.

[hfojvt]

6. withholding is not the same as taxing

When the bonus is added to your normal check, that puts you at a much higher income and the withholding rates tax you accordingly (even if it is a separate check, if you do not normally make $5,000 per paycheck, then that explains the higher rates. The government is taxing you as if you make $130,000 a year.) Chances are very good that you got much of that tax refunded back to you when you filed your taxes later.

[RB TexLa]

9. Apparently that is for everyone in America except the OP

:rofl:

Or so I have been told.

[Hello_Kitty]

11. Not when I was renting I didn't. Not enough deductions.

Even after I bought my house I didn't get much of it back.

[hfojvt]

18. I never have any deductions, except IRA

which is available to most people, and I always get a refund. If you didn't get a refund, then they must have taken out the right amount, but almost nobody pays 50% even with FICA taxes. The top rate is only 35% and 7.65% for FICA (but not for people at the top rate) and then 6.45% for the top state rate. That would be 41.45% in Kansas, but that's only gonna be true if your income is over $350,000

[AZ Criminal JD]

10. You weren't taxed at 50%

If you paid that at the end of the year when you filed taxes you are extremely math challenged.

[Hello_Kitty]

12. Or I didn't have enough deductions.

Everyone reading this thread must have a bunch of dependents and pay practically nothing in taxes. I get screwed every year. At any rate, the same should apply to the AIG execs. After they take their substantial deductions at the end of the year, I have no doubt they will recoup much of those bonus taxes.

[AZ Criminal JD]

13. Deductions have nothing with it

No one is taxed at 50%. No one.

[Hello_Kitty]

15. I looked it up, you're right about that. My bad. eom

[Phoebe Loosinhouse]

14. Not if the government deems that they have their own special exclusive rate of 90% on these bonuses

Regardless of any other circumstances, deductions, etc. I don't think you are getting that the Congress is talking about passing special legislation that deals ONLY with these bonuses.

They didn't pass any special legislation that determined how you, Hello_Kitty would be taxed on your bonus.

[Hello_Kitty]

17. You're right and I edited my post to reflect that. However

I'm still right about the Constitutional implication and people like legal scholar Laurence Tribe agree with me.

[itsrobert]

16. You weren't taxed at 50 percent. They withheld 50 percent

If your bonus threw you in a higher tax bracket when added to your total income, that's the way the system works.