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Levitt October 3, Freakonomics. Cyclopedia of Commerce, Accountancy, Business Administration v. British a slang word for a bribe.

Word Origin for bonus C from Latin bonus adj good. Tutor Gift Certificates Are Here! Discretionary bonuses are not required to be paid out, and the amount of the bonus is up to to the employer.

For example, many companies do year-end or holiday bonuses. If they are not part of a contract or otherwise promised, they are discretionary bonuses.

Nondiscretionary bonuses: Nondiscretionary bonuses are known and expected by the employee. They may be based on a predetermined formula, or on factors such as attendance.

They are generally included in the regular rate of pay, which is specified in the employee offer letter, in the employee personnel file, or a contract.

Say, for example, an employer provides an incentive pay plan for employees who achieve certain performance benchmarks.

Since the employee knows what is required of them in order to receive the bonus, it would be a nondiscretionary bonus. We're gonna stop you right there Literally How to use a word that literally drives some pe Is Singular 'They' a Better Choice?

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Save Word. Definition of bonus. Companies may award bonuses to both entry-level employees and to senior-level executives. While bonuses are traditionally given to exceptional workers, employers sometimes dole out bonuses company-wide to stave off jealousy among staffers.

Bonuses may be dangled as incentives to prospective employees and they can be given to current employees to reward performance and increase employee retention.

Companies can distribute bonuses to its existing shareholders through a bonus issue , which is an offer of free additional shares of the company's stock.

In workplace settings, a bonus is a type of compensation an employer gives to an employee that complements their base pay or salary.

A company may use bonuses to reward achievements, to show gratitude to employees who meet longevity milestones, or to entice not-yet employees to join a company's ranks.

The Internal Revenue Service IRS considers bonuses as taxable income , which means employees will need to report any bonuses they receive when filing their taxes.

Incentive bonuses include signing bonuses, referral bonuses, and retention bonuses. A signing bonus is a monetary offer that companies extend to top-talent candidates to entice them to accept a position—especially if they are being aggressively pursued by rival firms.

In theory, paying an initial bonus payment will result in greater company profits down the line. Signing bonuses are routinely offered by professional sports teams attempting to lure top-tier athletes away from competitive clubs.

Referral bonuses are presented to employees who recommend candidates for open positions, which ultimately leads to the hiring of said candidates.

Referral bonuses incentivize employees to refer prospects with strong work ethics, sharp skills, and positive attitudes. Companies offer retention bonuses to key employees, in an effort to encourage loyalty, especially in downward economies or periods of organizational changes.

She has written for The Balance on U. Read The Balance's editorial policies. It's always nice to give a bonus in a special check, to make it stand out as important.

Don't forget to add bonuses as wages and as Social Security wages and Medicare wages to these two reports: Form , the quarterly wage and tax form, and Form W-2 , the tax report to employees and the Social Security Administration.

Article Table of Contents Skip to section Expand. How Bonuses are Paid. Bonuses as a Business Expense. Bonuses Taxable to Employees.

Withholding Taxes on Bonuses. Changing Employee Withholding for Bonuses. Article Sources.

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