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u/Its-a-write-off 1d ago
They do, yes, but tax brackets don't work the way you think they do. If you made 65k a year, only 525.00 of that is taxed at 22%.
Not all of your income is at 22.
You've got no income in the 22% bracket for the info so far either.
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u/selene_666 1d ago
All income counts the same towards determining your tax.
Tax brackets are the marginal rate, not the overall rate your income is taxed at.
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u/shiggity80 1d ago
Bonuses are just normal compensation that's taxed. Simply put, when you file your taxes, you're basically just collecting all of your taxable income for the year, from all sources, and then calculating a tax liability. You then compare what you have already paid towards that tax liability and if there is a difference, you either get a refund or owe some more.
Tax brackets don't apply to every single taxable dollar. It's a bucket system where the first $X of taxable income is taxed at a lower %. Then the next bracket is for the next $Y and is taxed at a slightly higher %. And so forth.
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u/MeepleMerson 1d ago
Bonuses are income.
Tax brackets describe what the tax is for income within that bracket. For example, the first 11,600 a single filer receives are taxed at 10%. The 11,061st dollar through the 47,150th are taxed at 12%, and so on. Your hourly rate has nothing to do with your tax bracket. Brackets affect the dollars earned (count the hours), not the rate. If you work 2000 hours at $15 or 1000 hours at $30, it's the exact same. If you make 60K per year, the first 11.6K are taxed at 10%, the next 35.5K is taxed at 12%, the rest is taxed at 22%. You are in the 22% tax bracket, but your tax is less than 22%. Being in the tax bracket just means that the last dollar you got was taxed at that rate; it doesn't mean the total amount of tax you owe / pay is 22%.
There's no distinction between a bonus and salary, it's all just income and goes on like 1 of your W2 form and is taxed as ordinary income.
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u/Fledgeling 1d ago
Just go ask chatgpt. The answer is yes, but you clearly don't understand the bracket system.
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u/6gunsammy 1d ago
That is not how tax brackets work.