Friday, June 10, 2005

Bonuses and Taxes

I'm rich! Woohoo! Well not exactly. My employer offers a $2,000 bonus if you refer someone who is hired by the company. I really wanted that bonus. I told everyone I knew to get a job at my company. I begged. I pleaded. JUST GIVE ME YOUR RESUME. I WILL GET YOU A JOB. It amazed me how hard it was to convince people to let me get them a job. I almost resorted to putting my own ads on

After sweating and toiling and losing most of my self dignity, I was able to get my friend a job and today I got the first half of my bonus (I will get the next $1,000 after 3 months). The only problem is is that after taxes my $1000 bonus turned into a measly $550.

Don't get me wrong. I have no problem paying taxes. I think taxes are necessary to ensure that we continue living in comfort with roads, schools, and police officers. On a side note, I just want to say that I think its really contradictory for people to claim to be patriotic, support the war in Iraq and then bitch about taxes. You can't have it both ways people. But I digress.

The thing that really erks me is that I know that the HR person took out too much for taxes. Eventually, I will get this back in the form of a tax return at the end of the year, but in the meantime I am giving the government an interest free loan while I am paying interest on my credit cards. I used to think that overpaying on taxes was a good thing because I didn't notice it was gone and at the end of the year I got a nice lump sum of money. It was like painless saving. The only difference is that at least with my savings account I can earn 3% interest. If I overpay in taxes I get zip, zilch, nada.

I am done complaining now because regardless of how much I have paid in taxes I am still $550 richer. To celebrate, I made a nice little payment of $700 to my credit card bringing me to a new total of:


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1 comment:

Orfeater said...

Great site! - I'm starting from the beginning of your "journey", so my comment may have been noted by someone already. But you bring up a very excellent point about taxes and the "interest free loan" taken by the government. To "correct" this, you need to talk to your employer's HR department and increase your "exemptions". In a nutshell, when you fill out your W-4 when you start a job, you can indicate if your single, married, have kids, etc. But you're allowed to whatever you want on this form. Its just a way to estimate how much to withhold in taxes. So, if you say claim that you have 3 kids, that's fine. You're not lying, you're just telling your employer to withhold taxes as if you had 3 kids. In this case, they withhold LESS taxes than if you had no kids. So you get more in take home pay each paycheck. The one down side of this is if you may owe taxes at the end of the year, and if they're high enough, THEY charge you interest. Funny how its not a two way street, eh?