Submitted by PostPostMinimalist t3_117qc0e in nyc
Neoliberalism2024 t1_j9db0s3 wrote
New York State is ridiculous in general with taxes. They withhold bonuses at ~11% even though the max marginal tax rate is ~7%, so they can get a free interest free loan every year. And they make it illegal to set allowances (e.g., pay a lower tax rate the rest of the year since you over paid with your bonus). I work in finance and my New York State refund is close to $10k every year because of this.
AlexProbablyKnows t1_j9dbqu9 wrote
Yea this is the biggest scam of all. Having to get a giant tax refund each year because NYS decides to purposefully overtax bonuses.
I didn't know this about allowances? I recall setting my allowances higher middle of last year because I had already vastly overpaid my annual state tax.
titleywinker t1_j9dd83g wrote
You have guidance on this illegal allowance adjustment? I’d definitely advise my clients to update their withholding during the year if they overwithhold
the_lamou t1_j9e6d0v wrote
That's how bonuses work literally everywhere — the withholding is ALWAYS significantly higher than the rate you end up paying.
AmericanCreamer t1_j9emzdl wrote
Not what he’s saying though. Normally, well for federal taxes, bonus is withheld at the top marginal rate, but NYS withholds rate that’s higher than what’s even possible
HowDoWeAccountForMe2 t1_j9eujt6 wrote
That's not true either Fed bonuses are taxed at 22% which is the 3rd of 7 tax brackets. Right in the median household income.
This would be like the fed government holding bonuses at 37% and then a extra few percent as an added FU.
kiklion t1_j9ewz10 wrote
> That's not true either Fed bonuses are taxed at 22% which is the 3rd of 7 tax brackets.
I guess for you poors... /s
> For payments exceeding $1 million, the rate is 37 percent.
D14DFF0B t1_j9evj6u wrote
Uh, below a million, the federal withholding rate for supplement income is 22%. For someone that has a $900k bonus, that's going to severely underwithhold.
[deleted] t1_j9dz94y wrote
[deleted]
Astoria321 t1_j9emd67 wrote
Not OP but that's very interesting if cool and I appreciate you sharing this
Colonel-Cathcart t1_j9evlfn wrote
any source for that? From what I understand you don't get interest paid back to you when you get a tax refund.
kiklion t1_j9ex4jx wrote
Not sure about NYC but the fed pays you interest in what they owe you, but, AFAIK, only to the extent there is a delay in distributing any refund you are owed.
Colonel-Cathcart t1_j9g9g80 wrote
Yeah that's a little different though. We're talking about how overwithholding itself is an interest free loan until the refund comes. The interest that would get paid out is only if the refund is issued late, it doesn't catch you up on interest you might have earned if you didn't overwithhold in the first place
MikeDamone t1_j9fa9zs wrote
I'm not sure where you're getting your information. Your tax refund, from the IRS or the state, is 100% absent any interest. You are absolutely giving them an interest free loan in the form of over withholding.
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