Year End Bonuses For Small Businesses

Looking to give yourself a bonus for the end of the year for your small business? Unsure of the payroll tax consuequences? Your bonus may not be fully taxable, be sure to check the limitations so you do not overpay. Dont worry if you do, you can receive the excess via refund from the IRS. For 2008, the FICA limitations are set at $102,000. There is no limit for medicare. Do not overpay Fica, check your payroll to date before your bonus and calculate the applicable amount of tax. For a small business this could mean a potential overpayment of 12.4% (6.2% for the employee & 6.2% for the company match). If you have any questions, contact David C. Egan, CPA of Goldenthal & Suss CPA's & Consultants, P.C.