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I am to receive $25,000 from my employer for a bonus. For tax purposes, should I take a lump sum or 6 monthly payments?


Expert Eugene Jaspan's Answer:

If you can arrange to have the six monthly payments take place over two calendar years (i.e. - Oct to Dec, 2012 and Jan to Mar, 2013) you would be better off for tax purposes (you would only have $12,500 additional income to report each year)  If it must take place in the same calendar year, it makes little difference which way you take it for tax purposes. The entire $25,000 will be taxable in the same year.  If that's the case, you may want to take it all at once and invest it and get the benefit of interest on the entire $25K right away.  Just be sure that taxes are withheld from your bonus whichever way you take it so you don't owe a large sum of money when you file your return.



Gene Jaspan, CPA

Eugene Jaspan, CPA

New Jersey

24 yrs experience

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