Profit sharing

[Chicky2]

Ok, so my dh came home last night to tell me that they are starting a profit sharing program at his work.  This is the one time we're happy that he is not upper management, but just management, lol.  Upper man. cannot participate.  Anyway, my dh is salary, and it is wage-based, so when others work overtime, they'll get more, but he won't.  Fine, he has more perks than hourly.  So what I'm wondering is how the heck do I figure out what this will do to us, tax-wise?  Right now he's w/holding like 13 and we end up getting around $1k back on taxes w/all our deductions (farm costs-always a loss so far, kids, house, etc.).  He got a paper yesterday showing that if they'd had the profit sharing in Jan. and Feb. he would have gotten $833 in Jan., and $214 in Feb.  So that doesn't really give me much to go on, lol.  Can anyone help?  I don't want to end up owing (unless it's just a few bucks).  How do we figure out if he needs to readjust his w/holdings?  We do not qualify for EIC, and am already scared about what will happen when the tax cuts stop.

[doubledutch]

without getting a better sense of what his share will be each month, i don't know how you'd figure it out for sure, but i'd just assume (for tax purposes, not budget purposes) and additional $500/month based on jan-feb and go to the irs tax calculator and put in his current info except adding $6000 to his earnings.  sweet, lol.

we have profit-sharing but no profits yet (start up!).  we also had it at my previous employer, where i worked for eight years.  only owners and sales staff (commission) were excluded, so all employees got a cut after they had worked there for six months or something.  everyone who worked full time got an equal cut regardless of their wages (or working overtime or whatever).  when things were pretty decent, it was a few hundred dollars - quarterly, not monthly!  :)  the best check was a bit over $1000, and it was more like $30-$50 when things got slow.  even that, though, bought my groceries at the time, pre-kid, young and poor.

congratulations on your windfall!

[Chicky2]

Thank you.  I will do what you said about the calculator.  At least dh will have an "idea" whether or not it is going to be a good month or a medium month, or a bad month, lol.  He sees the job list as it is his job to make sure they get out of the shop on time.  He also knows how much gets scrapped, etc.  They did this to hopefully up productivity and cut down on scrap.  Now dh hopefully won't have so many issues w/people texting while they are suppose to be working.  He can tell them to get busy making themselves more $.  They also did it to get people to stop asking for raises just because they'd been there x number of years.  Only merit and skill based raises from now on. 

 I have never been so cautiously happy about more $.  It could potentially be up to $10k or so a year.  It is going to be treated as the bonus it is and go straight into sinking funds in cash.  And emergency funds, of course.  Our farm project envelopes will hopefully get full.

If it ends up screwing us up tax-wise, any ideas on what to do to prevent it?  Other than changing his w/holdings, what about pre-tax savings?  What options do we have?

[texmati]

at my dh's work, they take otu the max for profit sharing, 35%, I think. They you settle it with the government when you do your taxes-- he only get's profit sharing distrubtions once a year though.

[Chicky2]

Ok, so dh just called and said that the first bonus check will be $981.  The boss even billed some jobs that shipped yesterday to April because they 'didn't want everyone to think that every check would be that big'.  I believe it will be tacked onto his regular paycheck, which will make gobs of it go to taxes.  Any way to prevent that?  They do his Christmas bonus like that and over $200 goes to taxes.  And I get that he can make up to $13k more a year and still remain in the same tax bracket, but how the heck do I figure out if we are going to owe or get $ refunded next year?  I don't WANT a refund, ftr.  I want to break even or have them pay us $100 ultimately.  I don't want to sound stupid, but I do want to do something smart with it.  We NEED farm things.  I know we can turn around and deduct alot of it come tax-time.  I just don't want to spend it on that and end up owing it back to Uncle Sam later. 

[zebra15]

From my experience there isnt much you can do with bonus. When I was in corporate america and we got quarterly bonuses they were taxed at like 35-50% straight. There was nothing I could do about it, regardless of my tax witholdings or if I was tax exempt.  All I could do was wait until the next year and get a huge refund.  There isn't anything you can do, HR and payroll are required to withhold certain pays at certain rates.
 

Originally Posted by Chicky2 

Ok, so dh just called and said that the first bonus check will be $981.  The boss even billed some jobs that shipped yesterday to April because they 'didn't want everyone to think that every check would be that big'.  I believe it will be tacked onto his regular paycheck, which will make gobs of it go to taxes.  Any way to prevent that?  They do his Christmas bonus like that and over $200 goes to taxes.  And I get that he can make up to $13k more a year and still remain in the same tax bracket, but how the heck do I figure out if we are going to owe or get $ refunded next year?  I don't WANT a refund, ftr.  I want to break even or have them pay us $100 ultimately.  I don't want to sound stupid, but I do want to do something smart with it.  We NEED farm things.  I know we can turn around and deduct alot of it come tax-time.  I just don't want to spend it on that and end up owing it back to Uncle Sam later. 

[Chicky2]

Well, as long as it won't make us have to PAY at the end of the year.  I'd rather get more back than have to pay.