Do I get taxed more if my employer puts my raise as bonuses?

UPDATED: Oct 1, 2022

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Do I get taxed more if my employer puts my raise as bonuses?

My employer keeps shorting my checks because she forgets to add my raise she gave me 6 months ago as bonus. Is this legal? How does it affect me? Do I get taxed more for bonuses? Can I tell her not to do that?

Asked on July 19, 2019 under Employment Labor Law, Illinois


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You have to differentiate withholding vs. taxes. Your tax is based on your total earnings from your job, whether you earned it as income, a bonus, commissions, etc. So you pay the same total taxes if you get $50k as a salary, or a $40k salary and $10k bonus, or $25k salary, 20k in commission, $5k in a bonus, etc. But the withholding is different depending on type of income, and generally more money is withheld from bonuses than salary, for example. At the end of the year, when you file your taxes, if too much was withheld given your total income, you'll get a tax refund...but you'd be waiting until tax time to get the overwithheld money back. So you total taxes are not affected, but the timing of when the money is in your pocket may be.
That said--and not legal advice, but practical advice--my father was a CPA and was a fan of overwithholding: he said that it forced you to leave on slightly less money during the year, so you lived more frugally, then you got a lump sum "bonus" in the form of the refund which you could use for a major purchase or vacation, or put aside for retirement, as you preferred. He felt this worked better for most of his clients then getting a few dollars or tens of dollars more in each paycheck.

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