Are Social Security taxes withheld from bonuses?

Are Social Security taxes withheld from bonuses?

• A. Yes, only if the bonus exceeds a certain amount
• B. No, bonuses are exempt from Social Security taxes
• C. Yes, Social Security taxes are withheld from bonuses
• D. Only for employees with a higher tax bracket

Answer: (C)

Social Security taxes are indeed withheld from bonuses just as they are from regular wages. When an employee receives a bonus, it is considered supplemental income and is subject to the same tax treatments as regular earnings. This includes Federal Insurance Contributions Act (FICA) taxes, which cover both Social Security and Medicare taxes. Therefore, the correct answer highlights the fact that there is no exemption for bonuses when it comes to these taxes. Understanding this aspect of payroll taxation is crucial for both employers and employees, as it ensures that the appropriate amount is deducted from bonuses, thereby contributing to Social Security benefits in the future.

Social Security taxes are indeed withheld from bonuses just as they are from regular wages. When an employee receives a bonus, it is considered supplemental income and is subject to the same tax treatments as regular earnings. This includes Federal Insurance Contributions Act (FICA) taxes, which cover both Social Security and Medicare taxes. Therefore, the correct answer highlights the fact that there is no exemption for bonuses when it comes to these taxes.

Understanding this aspect of payroll taxation is crucial for both employers and employees, as it ensures that the appropriate amount is deducted from bonuses, thereby contributing to Social Security benefits in the future.