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However, bonuses can also quickly change ones tax return and the amount of taxes initially withheld depending on the payout.A portion of my salary is performance based (referred to as Variable Compensation and when it's added to my pay at the end of each quarter it shows up as a bonus, and is taxed accordingly.Remember, taxes may be withheld from your bonus at a higher tax rate at payout, but when you file your taxes at tax time your actual tax rate is based on your total taxable income and overall actual tax rate, which may be lower.These questions are explored below.In other words, where bonuses are provided in the form of cash or gift-certificates, both the employer and employee are losing out.Which method gets applied to your bonus?Ccras policy applies equally to employee awards but Ill deal strictly with gifts.
Structuring a Christmas bonus as a gift rather than paying cash or near-cash is the ever-elusive win-win for employees and employers.
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