Got a “personal” bonus from my boss. Do I have to pay taxes and if so, how do I go about that?
I actually think your boss is creating a problem for you. Of course it's taxable. The things IRS will look at (and they very well might, as it does stand out) what kind of payment is that. Why did it not go through payroll? The company may be at risk here for avoiding FICA/FUTA/workers' compensation insurance/State payroll taxes. Some are mandatory, and cannot be left to the employee to pay. On your side it raises your taxable income without the appropriate withholding, you may end up paying underpayment penalties for that (that is why you've been suggested to keep proofs of when you were paid). Also, it's employment income. If it is not wages - you're liable for self-employment taxes (basically the portion of FICA that the employer didn't pay, and your own FICA withholding). When you deposit the check is of no matter to the IRS, its when you got it that determines when you should declare the income. You don't have a choice there. I suggest asking the company payroll why it didn't go through them, as it may be a problem for you later on. "Yes, it's taxable. If anyone suggests it's a gift, they are mistaken. There's a line on the 1040 for ""other"" and as long as you claim it, you're fine with the IRS. It's 2012 income as you already got it.  Edit - mhoran makes two good points I'm not really able to address. (a) does a late bonus such as this effect one's penalty? (b) since it skipped payroll, will there be an issue by not having FICA withheld?" As others have mentioned yes it is taxable. Whether it goes through payroll and has FICA taken out is your issue in terms that you need to report it and you will an extra 7.5% self employment taxes that would normally be covered by your employer. Your employer may have problems but that isn't your issue.  Contrary to what other users are saying chances are there won't be any penalties for you. Best case you have already paid 100% of last years tax liability and you can file your normal tax return with no issues.  Worst case you need to pay quarterly taxes on that amount in the current quarter. IRS quarters are a little weird but I think you need to pay by Jan 15th for a December payment. You don't have to calculate your entire liability you can just fill out the very short form and attach a check for about what you will owe. There is a form you can fill out to show what quarter you received the money and you paid in it is a bit more complex but will avoid the penalty. For penalties quarterly taxes count in the quarter received where as payroll deductions count as if they were paid in the first quarter of the year. From the IRS The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay your tax through withholding, or do not pay enough tax that way, you might also have to pay estimated taxes. If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. If you are in the US and a regular employee, this will have to show up on your year-end W2 form as income. If it doesn't, there is some funky accounting business going and you should probably consult a professional for advice.
&gt;Dollars to donuts... I'd be willing to bet you have a pretty good boss there.  ...and she (my boss) left 6 months later for a better job. Now I report to a clueless idiot. He has no experience in our industry but was hired because he was part of the good old boys referral network the CEO has going on. He spent his time flipping companies for living prior to that.  Now the veneer is starting to come crashing down, despite me trying to make my boss look good for these past ~2 years. He's desperately trying to find a corporate controller (interviewing) to dump his mess onto as I type this. People external to the department are starting to gather he's all buzz words and power points and no substance. We were bought out by a bigger company recently and he can't hide behind his usual bullshit.  My new boss dropped the bombshell today that the girl who was in my position 3 years ago (but quit and took a managers job at a rival company through connections) in now a candidate for the corporate controller position. His reasoning hinged almost completely on the justification that she is already well like here and is familiar with the company. The girl doesn't even have a college degree. Let alone a masters. She left a tax mess on her way out that I've spent the last 3 years trying to fix from an administrative standpoint. Apparently the guy who kept my boss from looking like a total idiot (me) isn't worth mentoring up to the next level. But some random person with no college degree (but connections), and holes in her understanding of our line of work is a serious candidate for a promotion.   It's amazing to watch the bad decisions compound themselves into bigger and bigger problems. My boss inherited a relatively well oiled accounting department and turned it into an audit nightmare. He doesn't know half of what goes on, on a daily basis but feels the need to change processes arbitrarily without understanding WHY we do what we do and how it relates to our industry and external compliance, let alone GAAP.  It's quite apparent this ship is sinking. I'm trying my best to get off it now as of today. Trying to promote someone with less work experience and education over me was the last straw. The only good decision he made was realizing this girl's resume is a bunch of titles with no substance and realizing she wasn't a serious candidate, an hour after pissing me off calling me into a meeting to announce the joyous news. True story: Had a fire in our store, extension cord got hot and set carpet on fire. Employee put it out in 30 seconds, no big deal.  Store manager came in, bitched about having to pay to refill the fire extinguisher. That's how executives are, at least where I work. Complains about needing people to do the work, and then demands a huge bonus. By the time you've earned the income, it is basically too late to decide who it belongs to[*].  If the assets belong to one person, income from those assets must be declared by that person.  If you earn interest on a shared account, you must declare 50% of it each.  And so on.  (If you're tempted to fudge it bear in mind that banks report to the ATO about interest paid and account ownership.) I don't think Family Tax Benefits are taxable income, but I don't get them myself so I don't know. What you can do is think about how you want things arranged going forward.  That means making a prediction about who will have the higher income; it sounds like that's going to be you, and she will be working at most part time. Therefore she should hold anything that generates taxable income (bank accounts etc) and you should hold anything that generates losses (negatively-geared investments, charitable deductions, etc).  You could look into making a voluntary super contribution into her account which (imbw) will be deductible for you and get it into a lower-tax area. If you're earning on the order of $30k per annum in interest you're looking at paying $11500 tax on it if it's in your name vs $5k if it's in hers, so it's not a moot point. $420k in cash is arguably quite a lot, and perhaps you want to look at putting some of it into a low-cost balanced managed fund, such as those from Vanguard.  That will be somewhat more tax effective, though less stable.  If you're looking to buy a new house within a few years perhaps cash is the best place for it. [*] One kind-of exception is that if you have a family trust, the trust can decide at the end of the year to whom it will distribute its income.  However, you still have to decide to establish a trust in advance. "I've got £476,000 but the maximum house price is £450,000. What   happens to the £26,000. Does it stay there with ~6% interest (and no bonus of course), and would be available when I retire at around 75 (there would be about £106,000 by then)? Yes, anything you don't withdraw for your house purchase stays in the Lifetime ISA and keeps growing there. Also you do keep the bonus on it, which was paid at the time you subscribed, unless you make a withdrawal before age 60. After age 60 you can withdraw and keep the bonus. Note that you need to be buying with a mortgage to be allowed to use the lifetime ISA money (without penalty). This is mentioned on the gov.uk website as well as in the actual regulations that establish lifetime ISAs (search for ""first time residential purchase"" and look at clause (6)). That would mean you'd need to withdraw even less than the £450K and artificially borrow the rest. All that said, I suspect the £450K limit would be raised by 2049, given inflation. Can I buy a house and ""quickly"" sell it again, to simply access the money, The regulations say that on completion of the purchase, you must ""occupy the land as their only or main residence"" (there are a few exceptions, such as if it's still being built, or if you are at the time posted abroad by the government, but essentially you have to move in as soon as possible). There's no time limit stated in the regulations, so in theory you could move in and then sell quite fast, but personally I'd be nervous about this being seen as not genuinely intending it to be my main residence. In theory you could be prosecuted for fraud if you claimed a valid withdrawal when it wasn't, though given the wording of the regulations it looks like you'd be complying with the letter of the law." Here's an article on it that might help: http://thefinancebuff.com/restricted-stock-units-rsu-sales-and.html One of the tricky things is that you probably have the value of the vested shares and withheld taxes already on your W-2. This confuses everyone including the IRS (they sent me one of those audits-by-mail one year, where the issue was they wanted to double-count stock compensation that was on both 1099-B and W-2; a quick letter explaining this and they were happy). The general idea is that when you first irrevocably own the stock (it vests) then that's income, because you're receiving something of value. So this goes on a W-2 and is taxed as income, not capital gains. Conceptually you've just spent however many dollars in income to buy stock, so that's your basis on the stock. For tax paid, if your employer withheld taxes, it should be included in your W-2. In that case you would not separately list it elsewhere. Generally, prize money is miscellaneous income, reported on line 21 of your 1040 and not subject to self employment tax. See IRS publication 525 for more details; under 'Prizes and Awards', they give an example of winning a photography contest. Now, there are a couple of exceptions. If your main occupation is participating in contests such as this - or you do it sufficiently that it could be considered such - then it may be considered something you should pay self employment taxes on. If it's your first one - you're fine. Also, it would have to be something that doesn't look like work for me to be confident it's self employment income. I'm not sure that winning the Netflix prize for improving on their algorithm by 10% wouldn't run the risk of being considered sort of employment. I'm not a tax advisor, but in that case I would hire one to be sure.  I could imagine companies abusing 'prizes' otherwise to get out of paying employment taxes... Any money that ScottMcGready gives to the company is a personal loan that must be repaid by the company at some point without tax consequences. Any money that the company gives to ScottMcGready is either salary (Scott pays income tax, company counts this as cost), or a dividend (Scott pays dividend tax), or a loan (Scott must repay the loan). You normally wouldn't pay income taxes on money that isn't income. Transferring money or withdrawing it from a bank isn't an income generating event. I think it is very doubtful that you would need to claim that on income tax forms.