Please do not call HR or Payroll about these questions right now -- they are working hard on processing our January 1 raises, and have asked us to handle questions about the bonus for now. Thanks!
How is the pre-tax bonus amount calculated?
The amount is based on the number of hours that you were paid for between October 1, 2015 and September 30, 2016. 40 hours/week x 52 weeks = 2,080 hours. Anything less than 2,080 is pro-rated.
- If you work 40 hours/week, and you were paid for all your time off, then you get $1,000
- If you work an average of 32 hours/week, and you were paid for all time off, then you get $800
- If you work an average of 24 hours/week, and you were paid for all time off, then you get $600
- Unpaid leave could reduce the number of hours, and the amount of the bonus
- OT can increase the number of hours, and the amount of the bonus, but not above $1,000
Lots of SHARE members are on the books for 24 or 32 hours but regularly work more than that. We wanted to make sure that they got credit for their real hours, not just the "budgeted" hours. We didn't want to wait until the end of this year to get the bonuses, so we used last year's hours. It is not a perfect system, but it was the best we could come up with.
We didn't want the bonus to be reduced because people took vacation or sick time, had jury duty, bereavement time, etc.
I started part-way through last year, will I get a bonus?
Yes, but it will be pro-rated to reflect how long you have worked here. If you started full-time on July 1, then you worked 3 out of the 12 months in FY16, and you will get 1/4 of the bonus. You will also get the full 2% raise on January 1. (Any hours paid as a UMass Memorial employee in FY16, including per-diem hours, count for the pro-rating.)
Why do they withhold so much of the bonus in taxes?
The IRS requires UMass Memorial to withhold about 38% of any lump sum for taxes. This does not mean that you will end up paying 38% in taxes -- when you file your taxes for 2016, you will get back the difference between what you paid and what you actually owed at your real tax rate.
Example: I get $1,000 pre-tax. UMass withholds 38% ($380) in taxes. If my normal tax rate is 20%, then I really only owe $200. When I file my taxes, I will get the extra $180 back (or else the amount that I owe at tax time will be reduced by $180. Either way, I pay what I really owe, not the amount they withhold up front.)