Getting a bonus is exciting, but it also means you may have to pay more taxes. Here are the 6 most frequently asked questions about how bonuses affect your taxes and vice versa.

1. Are bonuses taxable?

Unfortunately, yes, bonuses are subject to payroll taxes. This means your employer will withhold money from your bonuses as part of your taxes, the same as with regular pay.

2. Why is more withheld from my bonus than from regular pay?

The amount of money withheld from your paycheck depends on your pay, the time period, and the info on your Form W-4. Your employer uses an IRS-approved method to figure out how much to withhold, though they can also simply withhold a flat 25% from your bonus. But don’t worry—if you end up owing less in taxes than was withheld from your pay, you’ll receive that money back as part of your tax refund.

3. Is it possible my employer made a mistake?

Yes, it’s possible and it happens. Someone may have added things up wrong, or entered the wrong information in the payroll software. If you have a question, the best thing to do is talk to the payroll department at your workplace.

If your employer did make a mistake, you won’t get the withheld money back until you file your tax return. But you can fill out a new Form W-4 to adjust your withholdings for the rest of the year.

4. How can I make sure my employer doesn’t withhold more taxes than is necessary?

Ask for a new Form W-4 from your payroll department, or download it from the IRS website. When filling out the new form, claim additional withholding allowances. Submit the new form to your payroll department before you receive another bonus. If you want to change your withholding amount back after that, simply fill out a new form.

5. What qualifies as a bonus?

For tax purposes, a bonus is any payment an employer makes to an employee in addition to the regular compensation. This additional payment may be in the form of cash or non-cash, and yes, holiday bonuses also count, even if they’re considered a gift.

However, actual gifts don’t count. So you don’t need to pay taxes on that Christmas ham or champagne your boss gave you.

6. Will my bonus put me in a higher tax bracket?

Yes, it’s possible. And if that happens, you’ll end up paying a higher tax on each dollar you earn after reaching that tax bracket. But most people don’t realize that you’ll still pay the same amount as usual on everything you earn under that tax bracket. So don’t sweat it!