You know what really grinds my gears?!

[Steve85]

So, we do a lot of salary maneuvering in pricing and I meant to follow-up on a recent discussion about moving salary into bonuses. The PM was talking about this very thing, that the tax withholding being much higher on a bonus and how that makes execution (hiring) difficult once the job is won.

A pretty smart guy made the comment that at the end of the day your total tax paid is the same. I surmise form his statement that he means as long as your bonus doesn't put you into a higher tax bracket, you either get a refund (or smaller liability) at the end of the year. For example, if you're in the 28% bracket and your bonus doesn't push you over the limit, if that bonus had 40% withheld, at the end of the year when you file taxes, you get credit for the 12% additional withheld. So at the end of the day, you pay 28% of taxable income, you just paid it at different withholding rates based on the type of pay.

I tried looking into this briefly a while ago and thought the info was heading towards "true, but depends on the other 4 trillion tax regs". Got any smart tax people here??