Americans who are receiving a year-end bonus for a job well done may be sorely disappointed when they open their envelope to find a big chunk missing.

Up to a third of a cash bonus can get swallowed up by the IRS’ special tax withholding on cash bonuses, or what it calls “supplemental income,” on top of Medicare, Social Security and state taxes. The federal flat rate for bonus pay is 22% for supplemental income under $1 million. Add Social Security (6.2%), Medicare (1.45%), and state taxes, and total withholding is roughly 30%-35%.

“That 22% federal withholding might be higher than your…regular tax bracket,” according to workforce management software company Homebase. “If they usually pay 12%, seeing 22% disappear from their bonus stings.”

Why can this spell financial disaster for Americans?

For the holidays, many Americans may have spent like they were receiving the full amount of the bonus instead of the bonus amount minus taxes, said Kevin Knull, chief executive of TaxStatus, which provides IRS data to financial advisers.

The $10,000 bonus for air traffic controllers who had perfect attendance during the government shutdown isn’t really a $10,000 bonus, for instance. The withholding on bonuses is a flat 22%, plus a 6.2% Social Security tax and 1.45% Medicare tax. Those reduce the bonus to just over $7,000, and you may still have to have state income tax taken out.

“That’s all immediately deducted and goes to Uncle Sam,” Knull said. “Somewhere around 48% of the population underestimate what they pay in taxes. Income taxes take a big bite out of paychecks.” If you spent the entire ‘$10,000 bonus,’ you overspent by about $3,000.

Separately, Americans should be aware that a bonus can also bump them into the next higher tax bracket if they’re already close to it, experts said.

Some (belated) good news?

If the tax cost of your bonus is less than 22%, or the withholding rate, you’ll receive a tax refund for the difference, or it will be applied to the tax due on any other income, experts said. Bonuses will be taxed as regular income on the final tax return. You’ll just have to wait until you file your 2025 taxes next year to get the money back.

On the flipside, if the tax cost of your bonus is more than the 22% withholding rate, you’ll owe the difference between what was withheld and your total tax cost.

How can you keep taxes low with your bonus?

If you haven’t maximized your 401(k) or IRA contributions for the year, consider adding some of the money to your retirement fund to reduce overall taxable income come tax season, wrote Kay Bell at financial products comparison site Bankrate. Contrbutions are income tax-free, but withdrawals later are taxed.

The 2025 IRA contribution limit is $7,000, or $8,000 if you’re age 50 or older. The 401(k) limit is $23,500 and an additional $7,500 for age 50 or older except those who are age 60 to 63. Those individuals have a higher catch-up contribution limit of $11,250 instead of $7,500.

Or if you expect your income to be much lower next year, pushing your tax bracket lower, consider asking your employer to defer the bonus until then, she said. You’ll still owe taxes, but you could save money by paying at a lower tax rate.

“However, even if your tax bracket doesn’t change year to year, some like receiving bonuses next year just to move the tax liability to 2026,” said Richard Pon, certified public accountant in San Francisco.

What about non-cash bonuses or gifts?

“Employers and employees may be shocked that gifts are usually taxable,” Pon said.

Cash and cash-equivalent gifts and bonuses such as gift cards, season tickets to sporting or theatrical events and gift certificates are taxed, Pon said.

“Sometimes employers deduct this from the regular paycheck,” he said. “Other times, employers pay these taxes on your behalf and gross up the income, which can double the cost of a $25 gift card to $50 with taxes if an employer pays the employee share of taxes…you should check your paystub to see if you are taxed.”

A couple of exceptions exist. The first is the “conduit gift,” which is a contribution made to an intermediary organization that then passes the funds to the final intended recipient. For example, if the parent teacher association (PTA) collected and gifted cash or gift cards to staff and faculty, those are conduit gifts and wouldn’t be taxed. The PTA was merely a conduit for gifts paid by parents.

Another exception is if a manager personally gives an employee a cash gift or gift card, Pon said. “That is a personal gift. It’s not a gift from your employer,” he said. Since the manager is “not the employer, those would be tax-free gifts to the recipients.”

He warned though those gifts may cause other frictions at work. “There are a lot of scrooges,” Pon said. “I once worked in an accounting firm and the managing partner complained I was giving gift cards and candy to our admin staff as a token of appreciation of helping me all year. The partner said I was making other managers seem unkind if they didn’t give out gifts.”

Noncash gifts like hams, turkeys, an occasional ticket to a sporting event or theatrical event are considered a “de minimis fringe benefit,” which is not taxable, Pon said. But note, a coupon or gift card intended to buy a turkey, ham or other item may be taxable, he said.

Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.

American consumers surrendered over $12 billion to fraudsters in 2024 according to the Federal Trade Commission. Nearly half of that or just under $6 billion was due to investment scams, and 2025 is proceeding on pace to eclipse that number.

Over half of that financial fraud now involves the use of artificial intelligence, making these crimes easier to fall for and harder to detect before the damage is done. And while financial institutions and regulators are themselves employing AI to identify and mitigate investment fraud, the only truly effective prevention is to avoid becoming a victim. Here is a look at some of the most successful AI-enabled financial scams of 2025.

Phantom AI trading bots. Investors have long chased the holy grail of a fool-proof trading system that could generate consistent profits (in the finest tradition of Ponce de Leon). A host of new automated trading programs have appeared, claiming to harness the power of artificial intelligence to beat the market. Called “bots,” short for robots but essentially a software program capable of processing huge amounts of data to detect patterns, many make outrageous claims including guarantees or touting astronomical records of success.

While the track record of legitimate trading bots has been mixed at best, bad actors create programs that lure investors into depositing increasingly large sums to a broker dealer of their choosing. Once the pot has grown large enough, the bot may disappear or cease functioning, taking the investor’s funds with them, a scheme called a “rug pull.” Another variation is a pump and dump, where the bot promotes a little known cryptocurrency to artificially pump up its value until the bot sells its own holding, crashing the price. Others may trick the target into granting access to their digital wallet and then draining the account.

Celebrity deepfakes. A deepfake is a manufactured image or video that uses a type of AI called deep learning to replicate a real person and manipulate what they are saying. Fraudsters love to use fake celebrity endorsements because the familiar visage creates a sense of trust by the victim. Many people form what are called parasocial relationships with public figures, a one-sided connection in which the fan feels they know the celebrity and therefore trusts their recommendation.

An AI generated bogus celebrity might offer a free product, asking only that the customer pay shipping by logging onto a counterfeit website. Poof, a $300 charge. Or worse. Other schemes involve promoting risky or fraudulent crypto investments or penny stock offerings.

According to cybersecurity firm McAfee, 72% of Americans have seen a deepfake pitch, 31% have clicked on the link, and 10% have lost money to the scam. According to McAfee, the top 10 most frequently faked celebs include Taylor Swift, Tom Hanks, Scarlett Johannson, Sydney Sweeney and Lebron James, pitching everything from free cookware and cosmetics to magic pink salt or even soliciting donations for victims of the Los Angeles fires. And the rise of deepfake scams doesn’t stop there. McAfee also lists the 10 most impersonated social media “influencers” including such household names as Pokemane, MrBeast, Karina and Brooke Monk, obviously targeting the younger set (as if the real TikTok influencers aren’t bad enough). Caveat emptor.

Crypto recovery room scams. What could be more fun for a lowlife criminal than to swindle an unsuspecting mark? How about swindling the same victim again?

Fraudsters pose as law enforcement agencies, law firms or crypto recovery specialists offering to assist in reclaiming cryptocurrency lost in a previous scam, hence the term “recovery room.” These chisellers often create flashy websites including AI-manufactured testimonials from nonexistent clients and charge a hefty upfront fee, typically payable in cryptocurrency as well. Any red flags here?

Tech support and fake QR code scams. It used to be the case that phishing emails were easily recognizable by their poor grammar and spelling errors. No more. Using AI, criminals produce professional looking pitches to entice gullible targets into signing up for tech support services they do not need and then fleece the victims. They often pose as well-known firms in the cybersecurity industry and convince their victims to grant remote access to infest their devices with malware.

Another twist is the fake QR code. Perpetrators advertise or distribute handbills or emails with a QR code that once scanned can implant malicious bugs or infiltrate your personal information for nefarious purposes.

How to protect yourself. Bad guys are always a step or two ahead of regulators and law enforcement when it comes to deployment of artificial intelligence. Consumers need to be aware of the increasingly realistic solicitations to avoid falling victim.

Warning signs of AI investment fraud include guarantees of impressive returns. Representations that an investment is a sure thing or without risk are almost always fraudulent. If it sounds too good to be true …

Demand for upfront payment is another alarm bell, especially if payment is requested in cryptocurrency. Also be highly skeptical of any unsolicited offer to make money or recover lost assets, especially if they employ high pressure tactics. Always independently verify the identity of anyone with whom you are considering a financial transaction. And never scan a QR code from an unknown source.

Investment fraud often involves solicitation to invest in a hot stock or digital asset. Remember that it is illegal for an unregistered individual to solicit securities investments. Before opening an account, do a background check on the individual at BrokerCheck.Finra.org to review the disciplinary history and work experience of legitimate representatives.

If you are the victim of a scam, report it as soon as possible to law enforcement. Contact the Federal Trade Commission at ReportFraud.FTC.gov, or the FBI Internet Crime Compliant Center at IC3.gov. They have online resources to direct you to your next steps. And although it is unlikely that you with be reunited with your money, you might help someone else avoid the same fate.

Christopher A. Hopkins, CFA, is a co-founder of Apogee Wealth Partners in Chattanooga.

From Target to Amazon, layoffs are making headlines this year.

RELATED: Layoffs are piling up, raising worker anxiety. Here are some companies that have cut jobs recently | Around 1,800 jobs expected to be cut from Target HQ on Tuesday

After losing a job, workers can forget to manage one of their biggest assets, their 401(k).

Financial planner Kyle Moore at Quarry Hill Advisors in St. Paul recommends moving an old 401(k) to a new one.

“A lot of people they go from job to job to job and they kind of leave a string of old 401(k)’s behind, which is important not to forget about them,” Moore said. “Consolidate them into their new 401(k)s. If you keep getting a new job, you should move the old 401(k)’s into the new ones.”

Moore recommends trying not to tap into your 401(k) after a job loss, because you could be hit with a penalty.

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