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Federal Income Tax
Posted on 10/28/21 at 3:34 pm
Posted on 10/28/21 at 3:34 pm
My cousin just got a pretty significant promotion. He was a bit perplexed by just how much his federal income tax changed. The other taxes stayed at about the same percentage. The numbers he shared with me are as follows:
Last month: 8,300 wages, 750 (about 9%) in federal taxes
This month: 12,825 wages, 1,675 (about 13%) in federal taxes
Only thing that changed was salary. Even with our 'progressive' tax structure, that seemed a little too disproportionate...
Seem right to you payroll accountants?
Last month: 8,300 wages, 750 (about 9%) in federal taxes
This month: 12,825 wages, 1,675 (about 13%) in federal taxes
Only thing that changed was salary. Even with our 'progressive' tax structure, that seemed a little too disproportionate...
Seem right to you payroll accountants?
10
Posted on 10/28/21 at 3:55 pm to meAnon
Posted on 10/28/21 at 3:58 pm to TigerintheNO
To put this into perspective, if you make $100k, you work October, November, and December solely to pay the federal government.
If people knew how much they were being robbed of, there would be extreme bloodshed in Washington DC.
If people knew how much they were being robbed of, there would be extreme bloodshed in Washington DC.
Posted on 10/28/21 at 4:00 pm to meAnon
Assuming he is single....
53000 x .24 = ~1000+ in taxes.
Calcs seem pretty spot on. Remember taxes are progressive, so any additional money is taxed at the highest bracket (ie 24%).
His overall tax rate will be less than 24%, but the additional raise and tax withholdings aren't linear versus his current withholding.
53000 x .24 = ~1000+ in taxes.
Calcs seem pretty spot on. Remember taxes are progressive, so any additional money is taxed at the highest bracket (ie 24%).
His overall tax rate will be less than 24%, but the additional raise and tax withholdings aren't linear versus his current withholding.
Posted on 10/28/21 at 6:04 pm to meAnon
Yeah that does seem right. I work my job about 8 months per year, and have a base salary / retainer the other 8 months, I'm typically off January and work Feb - Oct. My wages jump to around what your cousin makes in February and it's a similar amount.
Posted on 10/28/21 at 6:19 pm to meAnon
Payroll withholding is the dumbest calculation known to man. Every payroll provider uses the standard IrS withholding tables, and nothing about your previous or future checks goes into the calculation.
They simply take how often you get paid and multiply it by your gross pay that check. If your pay fluctuates the system doesn’t take it into account.
In other words, you can’t take your paycheck withholding and assume it’s all that accurate for lots of folks.
They simply take how often you get paid and multiply it by your gross pay that check. If your pay fluctuates the system doesn’t take it into account.
In other words, you can’t take your paycheck withholding and assume it’s all that accurate for lots of folks.
Posted on 10/28/21 at 6:34 pm to My Name Is Not Rick
quote:
I work my job about 8 months per year
quote:
have a base salary / retainer the other 8 months
Posted on 10/28/21 at 7:26 pm to slackster
quote:
Every payroll provider uses the standard IrS withholding tables, and nothing about your previous or future checks goes into the calculation
Well your future checks wouldn't be accounted for in your current check's withholdings because that's impossible.
Posted on 10/28/21 at 7:37 pm to SLafourche07
I think I figured it out.
First 8 months work. Next 8 months retainer. Next 8 months work is 24 months or 2 even years.
I'm just making shite up.
First 8 months work. Next 8 months retainer. Next 8 months work is 24 months or 2 even years.
I'm just making shite up.
This post was edited on 10/28/21 at 7:38 pm
Posted on 10/28/21 at 8:21 pm to TigerintheNO
So is that gross income or adjusted income?
Posted on 10/28/21 at 8:22 pm to meAnon
Imagine the impact on wealth accumulation if the government allowed us to save more tax free rather than capping it?
I mean, the lifestyle of someone making 500,000 and 600,000 isn’t that much different but the government won’t allow someone to put 100,000 in a 401k.
It’s worth it to have wages lowered snd put more into
I mean, the lifestyle of someone making 500,000 and 600,000 isn’t that much different but the government won’t allow someone to put 100,000 in a 401k.
It’s worth it to have wages lowered snd put more into
Posted on 10/28/21 at 9:49 pm to Boring
quote:Your math is wonky.
To put this into perspective, if you make $100k, you work October, November, and December solely to pay the federal government.
Posted on 10/28/21 at 11:54 pm to slackster
quote:
They simply take how often you get paid and multiply it by your gross pay that check. If your pay fluctuates the system doesn’t take it into account.
My pay use to fluctuate when I was in management, I would change my withholding monthly to be on target to try to break even come tax time.
Anyway taxation is theft, payroll taxes and income taxes are modern day slavery.
Posted on 10/29/21 at 7:35 am to meAnon
quote:
Even with our 'progressive' tax structure
The USA has the MOST progressive tax structure in the OECD.
Tax Foundation
Posted on 10/29/21 at 7:51 am to My Name Is Not Rick
quote:
Yeah that does seem right. I work my job about 8 months per year, and have a base salary / retainer the other 8 months, I'm typically off January and work Feb - Oct. My wages jump to around what your cousin makes in February and it's a similar amount.
Ahh the ever elusive 16 month year, I use to read about those in my accounting classes.
Posted on 10/29/21 at 12:34 pm to FinleyStreet
quote:
Well your future checks wouldn't be accounted for in your current check's withholdings because that's impossible.
Depends on your situation. I work in a field with a base and a variable pay component. Taking into account the fact that 12 of my 24 paychecks will be the base amount isn’t too difficult, but to my knowledge, it’s not allowed using the IRS tables.
Posted on 10/29/21 at 1:44 pm to meAnon
Flat tax sure would be nice....
Posted on 10/29/21 at 4:21 pm to meAnon
Tell your cousin to take the additional income and max out his retirement contributions, then (if he and dependents are fairly healthy) get a high deductible health plan and max out the HSA contributions.
This will knock his tax bill down and his retirement accounts will take off.
This will knock his tax bill down and his retirement accounts will take off.
Posted on 10/29/21 at 4:27 pm to slackster
quote:
Taking into account the fact that 12 of my 24 paychecks will be the base amount isn’t too difficult, but to my knowledge, it’s not allowed using the IRS tables.
Even if legal, payroll software doesn't work that way. It can't account for future earnings.
Posted on 10/29/21 at 5:02 pm to FinleyStreet
quote:
Even if legal, payroll software doesn't work that way. It can't account for future earnings.
I get that it doesn’t, but it’s because of the IRS withholding requirements. Obviously software would have no problem making the proper adjustments when there is a salary or base, but in order to make sure people pay all year, the IRS has standardized tables that don’t allow it.
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