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What's the deal with Federal Tax. Is it only applied after a hundred dollar paycheck? |
So Im a highschool student, and this is my first job that actually pays in checks. On two checks less then 100 dollars I wasnt charged for something that says Fed Tax, but on two over 100 dollars I was. So whats the deal with that? Also the two over were a hundred dollars apart, yet on one the tax was only 1.5dollars, but the other nearly ten times that. Someone please tell me what this means. If it helps I live in Jersey. Thanks It sounds like your payroll processing company did not have all of your W-4's when they started paying you. Once they got the W-4's they probably recalculated your prior checks and made up the difference all at one time. You can get a PDF copy of IRS Circular E at the link I posted below this message. You need to know how you receive your pay, such as weekly, bi-weekly, bi-monthly, monthly, etc. Then you can calculate your taxes. There are exceptions to the formula in the circular, such as any pay that is supplemental to your regular earnings. Overtime, back pay, bonus pay, etc. IRS requires supplemental pay be calculated at 28%, and withheld at that rate, no matter what your W-4 says. Now for the good news, just because that is what they withheld from your pay does not mean that is what the IRS keeps. Once you file your federal tax return next year, you will get back whatever is overpaid, or have to mail a check for what you underpaid. As a student, presumably single, you should file your W-4 as single with zero adjustments. That means withhold taxes at the single rate with no credits to lessen the tax amount. As a single student, your parents still claim your exemption when they file their taxes. You cannot claim that exemption when you file your taxes. For your parents, the difference in not claiming you represents a lot more money than if you claimed yourself. That is logical as one assumes your parents make a lot more money than you do. I hope this helps, if not, send me a message and I will try to help you figure what they withheld. Have fun! Will D Enterprise AL Source(s): http://www.irs.gov/pub/irs-pdf/p15.pdf#s... here's the deal, there is a federal formula for calculating the amount to be withheld from your paycheck depending on how often you get paid, as well. It sounds like you may get paid biweekly. Therefore, anything less than $102 will not be withheld. Up to $385, 10% will be withheld. For example, if you got your check of $150, assuming you claimed no allowances on the w-4, then you would subtract 102 from 150, which $48, 10% of that is $4.80, and that is what would be withheld. They will also take off 7.65% of your check no matter what for FICA taxes, namely social security and medicare. I'm not sure about New jersey taxes, but they have nothing to do with federal taxes. Also city taxes will also be taken out if that city does taxes. I hope this helps! college student with accounting major |
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