Leaving: Taxes: Bonus
From HPAlumnipedia
...Timing Your Severance Bonus
HPAlumnipedia > Leaving > Taxes > Bonus
If your termination date is close enough to the end of a calendar year, you might be able to rush or defer mailing in your release agreement to try to get your bonus paid in the current or next tax year.
Alan Silverstein, Fall 2002:
(See
my experience.)
You have 45 days to mail in the agreement, then the bonus is issued in
sync with a pay cycle no sooner than one week after it's received; I
heard 1-2 weeks later than that at the earliest.
(end quote)
Consider your likely amount of taxable income this year and next year. If you think you'll have enough next year to put most of your bonus in the 27% federal bracket or higher (see form 1040ES under the IRS website, or more directly at a lower location), but not enough to push much of it above the $84,900 level (at least for 2002) where the 6.2% component of FICA (Social Security) drops out, you might be better taking the bonus this year to avoid some FICA.
The best general strategy is to make your annual income as consistent as possible from year to year. With progressive tax rates and losses of deductions for higher incomes, this makes sense.
Alan Silverstein, Dec 2002:
I heard of one case where Payroll appeared not to process the bonus payout in a timely manner and a phone call was required. Also I heard that Payroll would be shut down along with the rest of HP during the Christmas holiday.
