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Cash bonus is taxed at a much higher rate, isn't it?
by tdeck 5y ago
Cash bonus is taxed at a much higher rate, isn't it?
- dilyevsky 5y agoNo it’s just income on your w2 same as rsus and salary. You’re thinking of long term cap gains which is entirely different matter
- tdeck 5y agoBonus fits into the category of "supplemental wages" which Google suggests has a special 22% tax rate. However that rate also apparently applies to RSUs most of the time.
- lr1970 5y ago> Bonus fits into the category of "supplemental wages" which Google suggests has a special 22% tax rate. However that rate also apparently applies to RSUs most of the time. This 22% tax rate is the default rate applied by your RSU brokerage which often leaves you owing taxes to the IRS. IRS treats RSU at vesting as regular income. For the tax purposes it is same as if you received their equivalent in cash and then used it to purchase the same number company shares [0]. [0] https://www.cordantwealth.com/rsus-tax-saving-and-hedging/ https://www.cordantwealth.com/rsus-tax-saving-and-hedging/
- dilyevsky 5y agoThis is a “withholding rate” (how much tax your employer will deduct from your paycheck) not an actual tax rate that you will owe
- BeetleB 5y agoNope. When your RSUs vest, their value at the time of vesting is added to your W-2 income, and gets taxed at regular income.