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[ad_1] So, you received a bonus at work? Congratulations. Whether it’s a year-end bonus or a reward for strong performance, a planned or an unplanned bonus, any extra money can be a great reward. Before you start thinking of all the ways you want to spend this extra compensation, it’s important to realize that the IRS is going to take a fraction of your bonus. How are bonuses taxed, and how much will the IRS take out of your bonus? The answer to these questions depends on several factors. Keep reading to learn more about how bonuses are taxed and what steps you can take to minimize this tax burden. how are bonuses taxed In This Piece How Are Bonuses Taxed? Methods for Paying Taxes on Your Bonus What You Can Do With Your Bonus Instead Preparing for Tax Season How Are Bonuses Taxed? The IRS views bonuses as a form of income. However, not all income is taxable. When filing your taxes, you need to know which types of income are taxable and which aren’t. For example, do you owe taxes on unemployment? No, the IRS doesn’t tax unemployment payments. Do you owe taxes on bonuses? Yes, because bonuses are considered a form of supplemental income. At the end of the year, you must include your bonus as part of your annual income when filing your taxes. This means the actual amount of taxes you pay on your bonus money is based on your tax bracket. Besides federal taxes, your bonus money is also subject to Medicare and Social Security withholdings. Additionally, depending on which state you live in, you may need to pay state taxes on your bonus income. Methods for Paying Taxes on Your Bonus How much are bonuses taxed? The exact answer to this question depends on your employer. The IRS gives employers two methods they can use when determining how much tax to withhold when disbursing your bonus payment. Employers can use the percentage method or the aggregate method. The Percentage Method The percentage method is the easiest and most common option employers use when disbursing bonuses. With this method, your employer will send you a separate payment just for your bonus. Your employer will also deduct a flat 22% from your bonus for federal taxes. If your bonus is over $1 million, your employer will deduct 22% from the first million dollars and then 37% for any part of the bonus over $1 million. This doesn’t mean you actually owe 22% of your bonus in federal taxes. Rather, your actual tax liability depends on your taxable income and tax filing status. Depending on your specific situation, you may receive a tax refund if your tax withholdings were too high. The Aggregate Method With the aggregate method, your employer includes your bonus on your regular paycheck. For example, if you typically earn $3,000 per pay period and your employer gives you a $5,000 year-end bonus, you’ll receive a check for $5,000. With this method, your employer withholds taxes based on the information listed on your W4 form, such as any deductions and tax filing status.   Do Bonus Checks Contribute to Your Tax Bracket? The added money on your paycheck could push you into a higher tax bracket. If this happens, your employer may withhold too much. However, you can obtain a refund for any taxes you overpay. What You Can Do With Your Bonus Instead There are several things you can do to minimize the tax implications of receiving a bonus at work and secure a higher tax refund. First, you can transfer all or a portion of your bonus to a tax-advantageous account, such as a 401(k), traditional IRA or Health Savings Account. Because contributions to these accounts are pre-taxed, you won’t have to pay federal tax on the amount you transfer. Keep in mind that you’ll owe taxes when this money is distributed. Additionally, the government sets limits on how much you can contribute to these accounts each year. So, you must make sure any contributions comply with these guidelines. Secondly, if you know you’ll earn less money next year, you can ask your employer to defer your bonus payout. For example, if you plan to go on extended maternity leave next year or retire in a few months, you can ask your employer to wait until next year to issue your bonus. Not all employers are willing to agree to this option because they may want all bonuses disbursed in the current year. However, if your employee will defer your bonus payout, you can lower your tax burden because you’ll have less taxable income in the next year. Preparing for Tax Season One of the best things you can do to minimize your tax burden every year is conduct an annual review of your W4 to make sure the information is correct. For example, check your filing status, dependents and other adjustments. Your employer uses this information to determine your tax withholdings, so it’s crucial to make sure this information is correct. It’s important to know how to do taxes yourself step by step. Understanding this process can help you minimize your tax burden by making sure you take advantage of all the tax credits and deductions you can. After all, does the IRS catch every mistake? Of course not. This means that if you haven’t done your research, you could miss out on tax deductions that could save you money. Alternatively, you can have a professional complete your taxes to ensure they’re done right. Credit.com can provide more tax-friendly tips and show you how to get a bigger tax refund. Get Help Filing Your Taxes The post How Are Bonuses Taxed and Who Pays? appeared first on Credit.com. [ad_2]

[ad_1] Most individuals are aware of tradeline companies or have at least heard about them. You may have probably considered working with a tradeline company, but you are still unsure if it is the right thing for you. Suppose you would like to add to your credit history. A tradeline would be an excellent choice, especially if you have no friend or family who has a perfect credit score that you can… Source [ad_2]

[ad_1] OVERVIEW Despite consumer spending declining in December 2022, consumers are still struggling with delinquencies. December saw consumers change their spending behavior by eating at restaurants less and reducing their spending across most spending categories. These spending habits coincide with consumer credit data, which indicates an increase in delinquent credit accounts and an increase in maxed … ScoreSense Market Report: Review of 2022 Credit Activity & Post-Holiday Spending Survey Read More » The post <strong>ScoreSense Market Report: Review of 2022 Credit Activity & Post-Holiday Spending Survey</strong> appeared first on ScoreSense. [ad_2]

[ad_1] The personal loan industry has seen immense growth in recent years due to the ease and convenience of obtaining fast cash. If you’ve ever applied for a loan, you know that lenders consider a whole host of factors before awarding one, and your credit score is likely one of them. Knowing exactly how that all-important three-digit number affects your eligibility and terms on any personal loan can… Source [ad_2]

[ad_1] Almost every day, the headlines report more layoffs. As economic uncertainty continues, more companies are cutting staff in several industries. For employees, the prospect of losing a job can be scary. But keep in mind that most layoffs involve only a small percentage of a company’s entire workforce. If you’re worried about the possibility of … How to Protect Your Job in a Recession Read More » The post How to Protect Your Job in a Recession appeared first on ScoreSense. [ad_2]

[ad_1] Months of difficult economic news has translated into job losses for many people. For example, more than 91,000 tech workers were laid off during the last half of 2022, and other companies including big box retailers and financial institutions, are planning layoffs in 2023. A layoff is never good news, but you can take steps … 5 Financial Steps to Take After a Layoff Read More » The post 5 Financial Steps to Take After a Layoff appeared first on ScoreSense. [ad_2]

[ad_1] Do you have some big savings goals this year? Or maybe there are a few things you’d like to buy, but need to save up for first. Saving money isn’t impossible—but you do need to be smart. Wondering how to save for big purchases? Honestly, it depends on a lot. You have your own unique and personal needs, budget and financial situation. So what works for you might not work for someone else. But, no matter your savings goal, saving money is essentially the same process for everybody. You need to spend less than you bring in. How Do You Budget for Big Purchases? If you’re looking for a place to start, we have a few suggestions that can help. Here are a few things you can do to save up: Define what the upcoming big purchases are, including amounts. Save by paying yourself first out of your income. Set SMART goals you can actually meet. Use the 50/20/30 rule to incorporate goals into your monthly budget. Open a high-interest savings account to maximize potential savings. Use microsavings/investing apps to make additional contributions to savings. How to Save for Big Purchases in 2023 and Beyond: The Details Following the list above can help you save money for big purchases this year without giving up your entire lifestyle. But you have to know how to put these tips into practice when saving for a big purchase. Get some more tips and details below. 1. Define Upcoming Big Purchases Begin by determining what you’re going to save for and knowing that you can’t save for everything. Can you save $10,000 this year to put down on a house? Maybe, but you may not be able to save for the new car and a trip to Disneyland at the same time. How much you can save in a certain period of time depends on your resources and obligations, so this is a step that’s different for everybody. Once you determine what you’re saving for, make it official. Write your goal on a whiteboard in the home office, put it on a piece of paper on the fridge and tell a trustworthy friend or family member about it. Writing it down and sharing it actually makes it more likely you’ll work toward the goal. Research shows that writing down and imaging a completed goal makes you 1.2 to 1.4 times more likely to successfully reach that goal.  2. Pay Yourself First Once you start saving, know that you need to put savings first. You definitely shouldn’t save so much out of every paycheck that you can’t cover your bills. But if you decide that your monthly budget allows you to save $150 every two weeks, the first thing you should do when you get paid is move that money into a savings account. The main reason for doing this is because it makes the money less tempting to spend. If you wait until you’ve done all your spending for the week, you might find that your $150 in savings was eaten up by running to the coffee shop, splurging on a movie and buying a new shirt you wanted but didn’t necessarily need. You can help ensure you pay yourself first with a couple of tips: Break up your direct deposit. If your employer offers direct deposit, you may be able to ask them to deposit a certain portion of each check into a savings account while the rest goes into checking. Set up automated transfers. You can have a specific amount moved from checking to savings every week by automated bank transfer. That way, you don’t have to remember to take your savings out of the picture on paydays. 3. Set SMART Goals SMART stands for specific, measurable, attainable, relevant and timely. This type of goal can be helpful when saving money over time for a large purchase. Find out exactly how much you need to make the purchase. “Saving enough to buy a car” is a decent goal, but you’re more likely to achieve a more specific goal, such as “saving $20,000 to buy a car.” When you’re specific, you can break the goal down in measurable bits. In the car example, if you want to buy the car in two years, you know you need to save an average of $834 a month. You need to be realistic. If you make $4,000 a month and have $3,000 in debt to pay, saving $834 a month is not really attainable. That would leave you with $166 for food and living expenses for the entire month. In that case, you’d need to reduce your goal, reduce your debt or increase your income. Make sure your goal is relevant to what you really want and need in the future. Do you really want a new car, or are you saving up for one based on some societal pressure to have one? Finally, set a deadline for your goal. That lets you break it down into smaller, more easily achievable chunks that lead up to that deadline. 4. Use the 50/20/30 Rule for Budgeting The 50/20/30 rule of budgeting is a bit more flexible than the traditional line-item budget. In the line-item budget, you set the amount you want to spend on each area of your life, including options such as bills, gas, clothing, entertainment and savings. The 50/20/30 rule only breaks your budget into three major categories. Half of your income goes to “needs”, which includes food, rent, health care and utilities. Then, 30% of your income goes to wants. That includes options such as entertainment, travel, clothing that isn’t “necessary” and dining out. The rest of the income—20%—goes toward savings.  So, if you make $4,000 a month, that would leave $800 for savings if you can align all your spending and debt with the numbers above. You might want $400 of that savings for general purposes and retirement. That leaves $400 to go toward your big-purchase goal. One way to manage your budget is

[ad_1] As a member of an underrepresented community, your existence in the business world might be slightly different than that of your peers. Whether you’re a woman, a person of color, or part of the LGBTQ+ community, the world of entrepreneurship can present unique challenges. While there are many basic ways to get started as an entrepreneur, expanding an existing underrepresented business is different. With that in mind, here are a few tips to help you thrive in the business world and grow your business. underrepresented entrepreneurs Lean into Your Uniqueness According to the US Senate Committee on Small Businesses and Entrepreneurship, “Over the last 10 years, minority business enterprises accounted for more than 50 percent of the two million new businesses started in the United States.” This shows that there isn’t a lack of creativity and passion in the underrepresented communities, but that the problem arises when they try to grow and expand. Leveraging the aspects that make them most unique is a great way to help stand out from the rest of the crowd and highlight your offerings. This can vary depending on your specific business, but identifying your unique aspect and then growing your business around it can not only provide you with a more clear roadmap, but strengthen your identity as a brand. Explore One-on-One Coaching When aiming to grow and expand your current business, having some guidance from an expert can help you speed up the process. Someone who has seen firsthand some of the trials and tribulations of the business world can provide you with not only a more mature perspective, but bring some new ideas to the table. There are a lot of options in this area, you could explore a business coaching service, or aim for something a little more structured like a business accelerator program. They can provide networking events, monthly workshops, and 1:1 capacity-building sessions. While your needs may vary based on your level of expertise or offering, look into some of these options in order to help you get a leg up on the competition. Use the Resources Provided In addition to the more well-known resources, such as business grants, there are other resources that are more specifically geared toward underrepresented business owners. You can find lists of these resources online, so make sure you do the research to find the programs and options that best fit your business’s needs. In addition to the resources targeting minority-owned businesses, there are also ones that provide more general information. As an entrepreneur, understanding financial literacy is a crucial element of your business’s success. There are a lot of books and resources available to help you get a better understanding of the finer details and how you can best financially support your business. Budgeting your small business can often become harder as your company grows, so it’s important to use the resources available to you, and ensure your money is being used wisely. Grow Your Network Having a strong and supportive network is a key element for all successful businesses, and underrepresented entrepreneurs have some unique opportunities. Understanding how to network is an important feat, and there are some ways to make sure you get the most out of your network. Minority-owned businesses often have strong networks and they range in size depending on location, in-person or online, etc. Networking is important for a number of reasons, one of the most important being the information that can be exchanged between entrepreneurs. This can range from information on target markets, most successful marketing tactics, or even macroeconomic factors as a whole. The more perspective you have the better decisions you are able to make. Need a Small Business Loan? Take It One Step at a Time When growing a business, at times entrepreneurs can want to see immediate results and impact, but it’s important to remember that, as cliche as it might be, it’s a marathon, not a sprint. These changes may take time to sink in, and it’s important to have patience and instead keep an eye out for indicators of change. This could range from seeing a shift in your target market to more obvious changes such as an increase in sales or profit. Taking a step back and looking for the beginning of change can give you a better understanding of cause and effect, and allow you to gauge if this is the direction you want to take. Making the decision to become an entrepreneur is an exciting prospect, but the next step is taking that business and growing it. As an underrepresented owner, you may face some unique challenges compared to others. Making sure you understand what resources you have at your disposal and how best to use them can help you navigate some of the murkier waters.  The post 5 Things Underrepresented Entrepreneurs Can Do to Grow Their Business appeared first on Credit.com. [ad_2]