This document discusses four different ways that a bonus can be calculated as a percentage of income and taxes:
1. As a percentage of income before bonus and before taxes.
2. As a percentage of income after bonus but before taxes.
3. As a percentage of income after bonus and after taxes.
4. As a percentage of income before bonus but after taxes.
For each method, an example calculation is shown using an income of $6,550,000, a 5% bonus rate, and a 30% tax rate to demonstrate how the bonus and tax amounts would be determined.
This document discusses four different ways that a bonus can be calculated as a percentage of income and taxes:
1. As a percentage of income before bonus and before taxes.
2. As a percentage of income after bonus but before taxes.
3. As a percentage of income after bonus and after taxes.
4. As a percentage of income before bonus but after taxes.
For each method, an example calculation is shown using an income of $6,550,000, a 5% bonus rate, and a 30% tax rate to demonstrate how the bonus and tax amounts would be determined.
This document discusses four different ways that a bonus can be calculated as a percentage of income and taxes:
1. As a percentage of income before bonus and before taxes.
2. As a percentage of income after bonus but before taxes.
3. As a percentage of income after bonus and after taxes.
4. As a percentage of income before bonus but after taxes.
For each method, an example calculation is shown using an income of $6,550,000, a 5% bonus rate, and a 30% tax rate to demonstrate how the bonus and tax amounts would be determined.
This document discusses four different ways that a bonus can be calculated as a percentage of income and taxes:
1. As a percentage of income before bonus and before taxes.
2. As a percentage of income after bonus but before taxes.
3. As a percentage of income after bonus and after taxes.
4. As a percentage of income before bonus but after taxes.
For each method, an example calculation is shown using an income of $6,550,000, a 5% bonus rate, and a 30% tax rate to demonstrate how the bonus and tax amounts would be determined.
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BONUS CONCEPT
1. Bonus is expressed as a certain percent of income before bonus and before tax.
2. Bonus is expressed as a certain percent of income after bonus and before tax.
3. Bonus is expressed as a certain percent of income after bonus and after tax.
4. Bonus is expressed as a certain percent of income before bonus and after tax.
Income before tax and before Bonus 6,550,000
Bonus 5%
Income tax rate 30%
1. BEFORE BONUS AND BEFORE TAX.
Income before tax and before bonus 6,550,000 × Bonus rate 5% BONUS 327,500
2. AFTER BONUS AND BEFORE TAX.
B = B% (Y – B) PROOF: B = .05 (6,550,000 – B) Income before tax and before bonus 6,550,000 B = 327,500 – 0.05B Bonus (311,904.76) 0.05B + B = 327,500 1.05B = 327,500 Income after bonus and before tax 6,238,095.24 B = 311,904.76 Bonus (x5%) 311,904.762
3. AFTER BONUS AND AFTER TAX.
B = B% (Y – B – T) T = T% (Y – B) PROOF: T = 0.30 (6,550,000 – B) Income before tax and before bonus 6,550,000 B = 0.05 [6,550,000 – B – 0.30 (6,550,000 – B)] Bonus (221,497.58) B = 0.05 (6,550,000 – B – 1,965,000 + 0.30B) B = 327,500 – 0.05B – 98,250 + 0.015B Tax (1,898,550.73) B = 229,250 – 0.035B Income after bonus and after tax 4,429,951.69 1.035B = 229,250 Bonus (x5%) 221,497.58 B = 221,497.58 T = 0.30 (6,550,000 – 221,497.58) T = 0.30 (6,328,502.42) T = 1,898,550.73 4. BEFORE BONUS AND AFTER TAX. B = B% (Y – T) B = .05 (6,550,000 – T) T = T% (Y – B) PROOF: T = 0.30 (6,550,000 – B) Income before tax and before bonus 6,550,000 B = 0.05 [6,550,000 – 0.30 (6,550,000 – B)] B = 0.05 (6,550,000 – 1,965,000 + 0.30B) Tax (1,895,177.66) B = 229,250 + 0.015B Income before bonus and after tax 4,654,822.34 0.985B = 229,250 B = 232,741.12 Bonus (x5%) 232,741.12 T = 0.30 (6,550,000 – 232,741.12) T = 0.30 (6,317,258.88) T = 1,895,177.66
