Quick salary question.

devilbones

Do you think that $100k + 10% annual bonus is the same as $110k? If not better or worse?

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Comments

beads

Depends on how the bonus is and has been paid in the past. Does the company make its past goals and has routinely paid bonuses? What are the conditions needed to support the bonus? Minimal EBITDA? Performance? Manager's goodwill?

Personally, I consider bonus potential to be just that - potential. No guarantee, nothing to count on. If it shows up or better? Great but its nothing I plan to see until its time to cash the check.

Full disclosure. I am on a 5 percent bonus plan where I am at but do not budget as though I will see a penny of it.

- b/eads

dave330i

Bonus are taxed at a higher rate than your salary.

devilbones

dave330i wrote: »

Bonus are taxed at a higher rate than your salary.

You may be doing your taxes wrong.

Danielm7

I never bet on a bonus, mine is "up to 10%", I assume 0%. I have coworkers who bet on it and are crushed if the company doesn't do as well, no thanks.

mbarrett

Depends on taxes - also would affect the 401k contribution, if there is any. Also, whether or not it's a guaranteed bonus - is it guaranteed in writing? If not then the higher salary is a better option.

joelsfood

Bonus is just that. a bonus. do your negotiating/budgeting on your base.

dave330i

devilbones wrote: »

You may be doing your taxes wrong.

It depends on where you are in the tax bracket and the size of the bonus check vs. regular paycheck.

I'm at the upper edge of my tax bracket and my bonus check is bigger than salary check, so the bonus check moves up a tax bracket.

Danielm7

dave330i wrote: »

It depends on where you are in the tax bracket and the size of the bonus check vs. regular paycheck.

I'm at the upper edge of my tax bracket and my bonus check is bigger than salary check, so the bonus check moves up a tax bracket.

In that case 10% more salary would be taxed at a higher tax rate too. I think many people don't realize how much actual tax and pre-tax contributions they make. They hear "You're getting 10K dollars!" and they get excited expecting a check for 10K.

EANx

devilbones wrote: »

You may be doing your taxes wrong.

Most employers figure out how much in taxes to remove based on that single paycheck, as if it were the same throughout the entire year. So A paycheck for $2,000 for a two-week period has its taxes calculated as if the person makes $2000 every two-week pay period (2x26=$52k). When you throw a bucket of overtime or a big bonus on top of that regular paycheck, things start going sideways. You got a $5,000 bonus on top of your $2,000 paycheck? Your $7,000 paycheck for that two-week period is taxed as if you made 7k every pay period (7x26=182k) as opposed to (2x26)+5=57k. You'll get that money back at the end of the year or, if you know it's coming, adjust your deductions to take it into account.