When you first find out you're getting a bonus, don't go out and spend all the money right away. Chances are you'll be shocked at the actual amount of the check you'll receive. Often, a huge amount of your bonus is withheld for tax purposes, but there are ways to avoid this.

        Most employers use an automatice payroll system to dole out the paychecks. They tell the computer how much money you receive in each paycheck and how often paychecks are issued. The computer calculates the withholdings for federal and state taxes as well as for Social Security taxes and it also knows what to withhold for 401K contributions, insurance, and other deductions.

        Example: You're paid every two weeks and your paycheck is $2,000. The computer applies the proper tax brackets for someone earning $48,000 per year and withholds the correct amount from each paycheck so the total taxes are paid by the end of the year.

        Now assume you're paid every two weeks, but you suddenly receive a one-time bonus payment of $10,000. The payroll system will assume you're going to receive this amount every two weeks and apply taxes at a higher rate than your usual tax rate. As a result, the computer withholds a huge amount of your money for taxes, even though you're not really earning enough to be taxed at that higher reats. Consequently, you can have as much as half of your bonus check withheld for taxes. (You'll eventually get the money returned as a refund, but you'd have to wait until you file your taxes for that year.)

        To avoid the higher withholding on your bonus checks, submit a new W-4 right before you receive your check and then submit another after the check is paid. The first W-4 should have an increaded number of exemptions, which will prevent the payroll system from withholding too much money. The second W-4 will return your exemptions to the correct number for your usual paychecks. This will trick the computer into paying you a larger portion of the bonus check, which is rightfully yours anyway!