Expecting A Year-End Bonus Or Gift From Your Employer? Here’s What You Need To Know - Forbes

Posted: 13 Dec 2019 12:00 AM PST

As December 31 creeps closer, some employees are wondering what Santa will leave in their payroll stockings. Visions of huge bonuses - like the $10 million in bonuses to be paid to the 198 employees of Baltimore-based St. John Properties - may be dancing in their heads. But statistically, most bonuses and gifts are modest, if at all.

Still, a gift (or a bonus) is an excellent way to wrap up the year. But what does it mean for employees?

If you receive a bonus or award from your employer - no matter how it's paid out (cash, jewelry, or Bitcoin) - you must report it as income in the year that it's received unless it's expressly excluded (like some stock options). If, however, your employer promises to pay you a bonus in the future, you don't have to report it until the bonus is made available to you, even if it's in writing or otherwise spelled out. That includes a fixed promise to pay you a certain amount over time.

If you're an employee, that income should show up with the rest of your compensation on your Form W-2. That's because it's taxed the same. There's no surtax on bonuses for most taxpayers, despite what you've heard around the water cooler. A bonus could push you into a higher tax bracket, but remember that the U.S. has a progressive income tax. That means the higher tax rate would only apply to the amount over the bracket threshold (for a quick refresher on progressive rates, click here).

When you are paid, whether it's regular pay or a bonus, your employer is required to withhold federal income tax. That's no surprise. But the Internal Revenue Service (IRS) may consider your bonus as "supplemental wages" for purposes of withholding. If that happens, the amount of withholding may be at a higher rate than your regular income tax bracket.

The rules that apply to supplemental wages can be complicated, but can be split along income lines:

Those who receive more than $1 million in supplemental wages during the tax year; and
The rest of us.

Since I suspect there are more of "the rest of us", I'll tackle that first.

If your bonus is paid together with your regular wages - for example, a single check - your withholding occurs as it would with any other check. In other words, it's treated as regular payroll.
If your bonus is paid separately from your regular wages or if it's paid together but noted separately - for example, a single check with the split specified in writing - your employer has a little flexibility. The employer can either withhold a flat 22% (the easiest option) on your bonus or figure the withholding amount using a more complicated formula based on your regular and combined withholding amounts. The latter, more complicated option tends to result in a higher withholding amount for most taxpayers.

What if you receive more than $1 million in supplemental wages during the year? First of all, awesome. But when it comes to taxes, the amount that exceeds $1 million is subject to withholding at 37% or the highest rate of income tax for the year (you can see the 2019 rates here). The amount under $1 million is subject to the same rules as the rest of us, as above. It doesn't matter what's on your form W-4. For the amounts under $1 million, the regular supplemental wages apply.

These rules apply to federal income tax. No matter which withholding rules may apply, the regular payroll tax rules for Social Security and Medicare still apply.

Confused? Don't be. Even though the withholding may vary, your bonus will be treated at tax time as though it was regular compensation (some limited exceptions apply). So, whether your employer withholds 22% or 28% on your bonus, if your tax rate is 25%, you'll pay 25% come tax time. If your employer withheld too much, you'll get the difference back in the form of a tax refund. If your employer withhold held too little, you'll have to pay the difference.

It's important that your employer gets it right - and crucial that you check your withholding - but there's no need to panic. If the amount of tax withheld for the year is not enough, you can make an estimated tax payment. There's still time to get it right: the deadline for making a payment for the fourth quarter of 2019 is January 15, 2020.

What if, instead of a bonus check, your employee hands you a gift? Cash is always taxable, as are cash-equivalent gifts like gift cards.

What's wrapped in that box may also be taxable, depending on the content. Non-cash gifts to employees are not considered gifts: no matter what you call it, a non-cash gift to an employee is considered compensation. That means it's reportable and taxable.

There is an exception for small non-cash gifts which are considered de minimis. De Minimis is Latin for "you're not getting a real gift." Okay, maybe not. It really means "of minimum importance" or "trifling" which, quite frankly, sounds worse. But if your employer provides you with a product or service and the cost of that product or service is so small that it would be unreasonable to account for it, the value is not considered income and it's not taxable. So, a fruit basket or box of chocolates may be considered de minimis (and thus tax-free) but a Rolex watch? Not so de minimis (and thus taxable).

If you have questions about whether your year-end gift or bonus is taxable, check with your Human Resources (HR) folks or your tax professional - or both.

Venezuela tracks residents via the Petro - Better use Bitcoin - Crypto News Flash

Posted: 30 Dec 2019 04:24 AM PST

The Venezuelan government uses the Petro to track the activities of its citizens.
The concept of the Petro is designed to favour the government while traders and citizens lose.

The launch of Petro's was an almost miraculous solution to combat US sanctions and inflation in the country. When the Venezuelan government launched its digital coin in 2018, it seemed to be at the forefront of innovation. But almost two years later, the Petro is only a tool to control the population.

Petro is everything that Bitcoin is not

Eduardo Gómez, head of support for the start-up company Purse.io (a platform that allows the use of Bitcoin and Bitcoin Cash to reduce costs for online purchases), gave an assessment of Petro. He first referred to the "Fatherland Card" (Carnet de la patria"), an identification and control document that allows citizens to receive state subsidies.

The "Map of the Fatherland" platform has become part of an Orwellian control and monitoring system. The government uses the platform to track and determine who receives which subsidies. It is also used to conduct regular checks on family members to feed a government database.

Gomez explains in his Twitter account that this platform has a exchange that was set up for "trading Petros". In November, the government announced that it would distribute 0.5 PTR to pensioners and employees as a Christmas bonus "by airdrop". The scope of the decision was extended to all persons registered on the "Fatherland Card" platform.

As Gomez says, only a few selected companies have the appropriate system to process payments through Petro's:

The merchants are forced to accept the Petro as payment at a fixed rate. (2.5 Million VES/PTR), whereas you can buy the token in the open market for as low as 1 Million VES/PTR.

Gomez explains what the consequences of this system are. If people can buy the Petro and make a profit of more than 50% to spend it in certain places, then it should increase the pressure to buy until a balance in the price of the Petro is reached. As a result, companies are forced to accept the petro while they are unable to sell their stocks, which is why many stores close. Gómez specifies exactly who benefits most from this arrangement: the government officials who sell their Petro on the market:

Not to mention the incredible money laundering operation they have going on with this thing.

Although you can see long queues to issue the tokens, the citizens are the ones who lose in the long run. For the time being, there are no purchase orders for the digital coins on the Petro exchange platform. The trend could reverse, but without the necessary guarantees most people will not invest in Petro.

People will likely buy PTR to spend it, driving the price up until there's equilibrium. Meanwhile, merchants will go out of stock (and business) selling goods for 50% less of what they are worth. Long queues of people have been popping up to spend the damn thing.

— ⚡🇦🇷Eduardo🇻🇪⚡ (@Codiox) December 29, 2019

Bitcoin trading volume reaches a new record in Venezuela

While Petro is pushing to increase the government's control power, Bitcoin continues to consolidate as an alternative to the economic crisis and controls. The number one cryptocurrency offers all the advantages and guarantees that Petro does not have.

As reported by CNF, the CoinDance data platform has set a new record for Bitcoin trading volume in Argentina and Venezuela. Last week, 250 billion bolivars (VES) were traded on the peer-to-peer LocalBitcoins exchange. This represents a 15% increase over the previous week to $24 million.

Trading volumes have continued to increase since November. It is very likely that this trend will continue and increase depending on the crisis. Venezuela is one of the countries with the highest inflation in the world and its citizens have turned to foreign currencies and Bitcoin as an alternative to carry out daily operations and value retention.

The price of Bitcoin stands at $7,342, at the time of publication, with a sideways movement (0.22%) in the last 24 hours.

Last Updated on 30 December, 2019

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