"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.)"
Yes, it should be paid as part of your paycheck... Perhaps there are technical reasons why your employer prefers the bonus, about that I don't know. Other non-technical possibilities are: paying for overtime as overtime would set a precedent and would also imply that all employees who work overtime would also be paid. A bonus is traditionally given as a once-only reward for work above and beyond the call of duty. For an employer, it's the cheapest form of a raise. Psychologically, a bonus always suggests "employer generosity" rather than something the employee has earned.
Joanna