Clerkship Bonus after taxes? Forum

[Anonymous User]

The firm that I am going to be working for in D.C. is going to give me a $50,000 clerkship bonus in my first paycheck. Does anyone have any idea how much the check will actually be for after taxes?

[Anonymous User]

Well at $160,000, you're at the tail end of the 28% bracket. Part of that will be taxed at 28% and part at 33%, subject to state and local taxes. It's impossible to say exactly how it will be taxed unless you want to tell us your filing status, deductions, credits, etc. This is not legal advice.

[TooOld4This]

What are you asking? What the check will be or how much tax you will actually owe?

There is no "bonus tax rate." However, since bonuses are essentially "last dollar" money, you generally want to withhold at your marginal tax rate, unless you have otherwise overpaid. This is because your salary withholding rate generally assumes that you will make the amount of your paycheck times the frequency of pay (i.e. if you get paid semimonthly you will make any given paycheck times 24 in a year). Your tax withholding for salary will be your estimated tax obligation for the year divided by the number of paychecks, even though you technically pay 10% tax on the first $X dollars, 15% on the next $X, etc. Because of this, employers will often set a default rate (say 28%) that they will withhold from bonuses unless you give them other instructions.

TL;DR: figure out what you should owe on the money and ask if your employer can tax it at the proper rate, otherwise adjust your withholding on your W-4 to account for the under/overpayment.

[Anonymous User]

When I used to get bonuses >10K they (not a law firm) would take out something around 40% in taxes. I am not sure why or if this is typical procedures given I generally was not near the top federal rate and didn't have local taxes and a pretty low state rate. I didn't care since it helped me out at the end of the year.

[steve_nash]

Speaking in broad strokes, my friend who received a $50,000 clerkship bonus, with NY market salary, said after taxes, the bonus was a little less than $30,000 but greater than $25,000. I imagine it'll be similar for you. If you want to calculate it more precisely, it'll be along the lines of the 28% bracket mentioned above, plus either the ~6% VA income or 8.5% DC income, and all the other variables in our great tax code.

[09042014]

Speaking in broad strokes, my friend who received a $50,000 clerkship bonus, with NY market salary, said after taxes, the bonus was a little less than $30,000 but greater than $25,000. I imagine it'll be similar for you. If you want to calculate it more precisely, it'll be along the lines of the 28% bracket mentioned above, plus either the ~6% VA income or 8.5% DC income, and all the other variables in our great tax code.

I assume you are speaking towards the amount withheld. You won't be taxed over 40% in actuality. The withholding on bonus checks is huge, but you'll get a lot back in the refund.

[steve_nash]

Speaking in broad strokes, my friend who received a $50,000 clerkship bonus, with NY market salary, said after taxes, the bonus was a little less than $30,000 but greater than $25,000. I imagine it'll be similar for you. If you want to calculate it more precisely, it'll be along the lines of the 28% bracket mentioned above, plus either the ~6% VA income or 8.5% DC income, and all the other variables in our great tax code.

I assume you are speaking towards the amount withheld. You won't be taxed over 40% in actuality. The withholding on bonus checks is huge, but you'll get a lot back in the refund.

Yes, sorry: should have been more clear.

[Anonymous User]

What your check will be= about 60-50% of the bonus (after tax)

Since you are withheld at a rate that assumes 160 full year- you should slightly be overwithheld and get a refund at year end

What you will owe- depends on your full year marginal tax bracket. If you made 60k for 8 months and 160k pro rated for 4 months (40k + 54k= 94k) would put you in a 28% tax bracket. Add FICA Medicare (a portion of this maxes out around 100k) and State taxes- you're in about the 40% plus tax bracket on your marginal bonus dollars.

[005618502]

I think OP wanted a number. 50,000 x .28 = 14,000
50,000 x .06 = 3,000

End of year after rebate you should get 32,000 from this

This is high end since your whole check wont be hit with the high 28% bracket (0-5000 is hit at 1% and so on)

Initially a 50,000 dollar bonus should put 26-29 thousand dollars in your pocket at the day of pay

[Riles246]

I think OP wanted a number. 50,000 x .28 = 14,000
50,000 x .06 = 3,000

End of year after rebate you should get 32,000 from this

This is high end since your whole check wont be hit with the high 28% bracket (0-5000 is hit at 1% and so on)

Initially a 50,000 dollar bonus should put 26-29 thousand dollars in your pocket at the day of pay

Bonuses are also subject to SSI and whatnot so don't forget the supplemental taxes. But I agree with the $26-29k ballpark figure as a take-home amount on the check.

[Anonymous User]

Can anyone comment on a typical tax rate for the GS-11 salary (about $60K) for first-year law clerks? Thanks!

[Anonymous User]

Speaking in broad strokes, my friend who received a $50,000 clerkship bonus, with NY market salary, said after taxes, the bonus was a little less than $30,000 but greater than $25,000. I imagine it'll be similar for you. If you want to calculate it more precisely, it'll be along the lines of the 28% bracket mentioned above, plus either the ~6% VA income or 8.5% DC income, and all the other variables in our great tax code.

I assume you are speaking towards the amount withheld. You won't be taxed over 40% in actuality. The withholding on bonus checks is huge, but you'll get a lot back in the refund.

I realize this is a very old thread, but it's directly on point for my question. I recently received my clerkship bonus ($50K). The actual amount in my pocket was roughly around $29K. Are there any steps I can take to help ensure I get some back on the tax refund when I am filing my taxes, or is this entirely up to the law firm and how it organizes wages for its associates?

[2013]

Speaking in broad strokes, my friend who received a $50,000 clerkship bonus, with NY market salary, said after taxes, the bonus was a little less than $30,000 but greater than $25,000. I imagine it'll be similar for you. If you want to calculate it more precisely, it'll be along the lines of the 28% bracket mentioned above, plus either the ~6% VA income or 8.5% DC income, and all the other variables in our great tax code.

I assume you are speaking towards the amount withheld. You won't be taxed over 40% in actuality. The withholding on bonus checks is huge, but you'll get a lot back in the refund.

I realize this is a very old thread, but it's directly on point for my question. I recently received my clerkship bonus ($50K). The actual amount in my pocket was roughly around $29K. Are there any steps I can take to help ensure I get some back on the tax refund when I am filing my taxes, or is this entirely up to the law firm and how it organizes wages for its associates?

This has nothing to do with the law firm. It withheld the 20% for federal withholding on supplemental wage and the state supplemental wage withholding (which differs state to state). How much you make this year, your marital status, etc., will determine how much you get back.

[Anonymous User]

Speaking in broad strokes, my friend who received a $50,000 clerkship bonus, with NY market salary, said after taxes, the bonus was a little less than $30,000 but greater than $25,000. I imagine it'll be similar for you. If you want to calculate it more precisely, it'll be along the lines of the 28% bracket mentioned above, plus either the ~6% VA income or 8.5% DC income, and all the other variables in our great tax code.

I assume you are speaking towards the amount withheld. You won't be taxed over 40% in actuality. The withholding on bonus checks is huge, but you'll get a lot back in the refund.

I realize this is a very old thread, but it's directly on point for my question. I recently received my clerkship bonus ($50K). The actual amount in my pocket was roughly around $29K. Are there any steps I can take to help ensure I get some back on the tax refund when I am filing my taxes, or is this entirely up to the law firm and how it organizes wages for its associates?

This has nothing to do with the law firm. It withheld the 20% for federal withholding on supplemental wage and the state supplemental wage withholding (which differs state to state). How much you make this year, your marital status, etc., will determine how much you get back.

Understood. Thanks!

[kovdak02]

Can anyone comment on a typical tax rate for the GS-11 salary (about $60K) for first-year law clerks? Thanks!

A lot of variables here. First, check the city you’ll be in for a location variance. You may get a bump over the standard GS-11 rate. Second, your take home pay will depend on what your state taxes are. A no income tax state like Florida or Texas will look different than California or Illinois.

[Anonymous User]

Can anyone comment on a typical tax rate for the GS-11 salary (about $60K) for first-year law clerks? Thanks!

Several years ago (2013-14), I took home around $1650 every two weeks in CA when I was JS-11.

[Anonymous User]

I understand I could do math, but if anyone has gotten a two-clerkship bonus ($70k) in DC and wants to let me know what your take-home was (single, no kids), I'd appreciate it!

[Anonymous User]

I understand I could do math, but if anyone has gotten a two-clerkship bonus ($70k) in DC and wants to let me know what your take-home was (single, no kids), I'd appreciate it!

$33k

As an aside, the earlier in the year you start, the lower your refund (because the bonus is taxed as if you made 200k the whole year).

[lawlo]

Bonuses really hit home how sickening taxes are.

[Anonymous User]

I understand I could do math, but if anyone has gotten a two-clerkship bonus ($70k) in DC and wants to let me know what your take-home was (single, no kids), I'd appreciate it!

$33k

As an aside, the earlier in the year you start, the lower your refund (because the bonus is taxed as if you made 200k the whole year).

As another data point, I took home $31k in DC from a one-clerkship $50k bonus that I got in October.

And of course, the bonus may be withheld as if you made 200k the whole year, but if you make substantially less you’ll get part of that back when you do your taxes as a refund.

[cheaptilts]

I understand I could do math, but if anyone has gotten a two-clerkship bonus ($70k) in DC and wants to let me know what your take-home was (single, no kids), I'd appreciate it!

$33k

As an aside, the earlier in the year you start, the lower your refund (because the bonus is taxed as if you made 200k the whole year).

If you received $33k from a 70k bonus, you must’ve received a huge refund absent screwing up your withholdings for the rest of the year. That’s abnormally high taxes in DC/NYC/SF—anywhere, really, for a 70k bonus.

[Anonymous User]

I understand I could do math, but if anyone has gotten a two-clerkship bonus ($70k) in DC and wants to let me know what your take-home was (single, no kids), I'd appreciate it!

$33k

As an aside, the earlier in the year you start, the lower your refund (because the bonus is taxed as if you made 200k the whole year).

If you received $33k from a 70k bonus, you must’ve received a huge refund absent screwing up your withholdings for the rest of the year. That’s abnormally high taxes in DC/NYC/SF—anywhere, really, for a 70k bonus.

What sort of confuses me is, how can you screw up your withholdings? At least up through 2019, the W-4 form was pretty clear about where you check boxes and what numbers to put in and why. So, for example, if I'm a single person with no dependents living in NYC working in Big Law after law school, there's really only 1 or 2 options for how many allowances I can take on the withholdings form (i.e., 2 or 3). But I hear scary stories about people messing up their withholdings, not getting enough taken out of their income throughout the year, and then facing not just a tax liability but a penalty for under-withholding when they file. It worries me that I'm missing something here.

(I get that in 2020 the W4 is new; that's a whole new can of worms..)

[beepboopbeep]

Some people intentionally do less withholding during the stub year (or as a summer) to get more back in each paycheck rather than having a huge refund. It's not hard to get it right as long as you follow the partial year calculators, but... from personal experience, it is possible to forget to change your withholdings back the following year and end up underpaying a lot :-/

[Anonymous User]

Some people intentionally do less withholding during the stub year (or as a summer) to get more back in each paycheck rather than having a huge refund. It's not hard to get it right as long as you follow the partial year calculators, but... from personal experience, it is possible to forget to change your withholdings back the following year and end up underpaying a lot :-/

Underpaying so that you have a liability you need to pay at the end of the year, or so much so that in addition to the liability you have to pay a penalty? That is what worries me.

[beepboopbeep]

Well, it worked out perfectly during the stub year, since I used the calculator; I think I got like a couple hundred bucks refund that year. But the next year when I forgot to change my withholding back to normal, yes, it was big enough that I owed a penalty (although you can get it waived in some situations, which I was able to show).