Let's say an employee does overtime work that amounts to a few thousand dollars. Technically, that should be paid in the regular paycheck and taxed accordingly.
However, why would an employer prefer to pay it out as a bonus -- where I claim the bonus at the end of the tax year? I assume the employer's saving money (but maybe not.... anyone know?), but is this practice screwing the employee over? (no, this isn't pushing me into a new tax bracket.)
Similarly, if an employee negotiates a raise, why does an employer pay it as a bonus--even if only temporarily (for a few months)?
I'm trying to figure out if I'm getting screwed under this bonus system. I don't consider getting screwed having to pay taxes on Apr 15 if I haven't paid them each pay check. I always just sock as much of it away as possible. I'm asking if I'm paying more than I would otherwise by receiving bonuses rather than as a salary.
Also, does anyone have experience negotiating salary as a % of sales of the product one produces? If so, I'd like to know more about it, on or off list.
Thanks,
Kelley