WROC Rochester First
CPA Jamie Block discussed the tax considerations of year end work bonuses Monday on News 8 at Sunrise. Block said according to a 2014 survey from consulting firm Challenger, Gray & Christmas, 78 percent of businesses expected to offer a year-end gift or bonus. Bonuses are treated like additional pay, meaning they are subject to withholding, FICA, and FUTA taxes just like regular pay. When it comes to bonuses, Block said the IRS expects you to pay 28 percent of the money you receive to federal income tax withholding. If you use the money to bolster a 401(k) contribution, the tax can be deferred. Block noted you can shelter a bonus by paying upcoming deductible business or personal expenses before December 31.