Author Topic: Federal income tax withholding higher than estimates.  (Read 4281 times)

NomadMustache

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Federal income tax withholding higher than estimates.
« on: June 03, 2015, 09:11:10 AM »
Hi,

I'm a single man with one job and have filled out my W4 to claim two allowances. According to all my coworkers, this works out for them. They have meager refunds, and a reasonable amount with held.

I completed the free TurboTax W4 calculator and it says my withholding per paycheck should be approximately $117.

However, it's always at least $200, and most recently was $247. It's often near 20% of my paychecks, and that's just federal income tax.

Am I doing something wrong? Is the TurboTax calculator inaccurate? Will my refund be exorbitant, or do they really take so much? Is there any way to avoid this?

Thank you in advance for the mustachian wisdom.

matchewed

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Re: Federal income tax withholding higher than estimates.
« Reply #1 on: June 03, 2015, 09:16:39 AM »
Are you working overtime? Is there a mistake somewhere in your W4 at work?

As for the turbotax calculator or your refund and the like we have no clue, we don't have enough information. How much do you make a year/hourly wage? If it's hourly wage how many hours a week will you work (on average)?

dandarc

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Re: Federal income tax withholding higher than estimates.
« Reply #2 on: June 03, 2015, 09:17:22 AM »
To know for sure, we need details.  Everything on your pay stub + any other deductions / credits you might qualify for.  The state you live in.

Do you get the same gross salary from each check?  If you work 20 hours one week, and 60 hours another, that's obviously a huge swing in income, and therefore income taxes.

NomadMustache

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Re: Federal income tax withholding higher than estimates.
« Reply #3 on: June 03, 2015, 09:30:59 AM »
Thanks to all for the quick responses.

Here's a breakdown of my most recent and mostly average two-week paycheck.

Regular hours at $16.50/hour: 80
Overtime hours at $24.75/hour: 8.4

Gross Pay: $1,527.90

Federal Income Tax: -$247.54
Social Security: -$93.73
Medicare: -$21.92
GA State Income Tax: -$81.28

Medical: -$28.58
Dental: -$3.70

Net Pay: $1,051.15

I don't, so far as I know, qualify for any credits. I'm single and have no kids, no house, etc. The hours on the paycheck above are high by only a few over time hours. Even on the previous paycheck, where I had only worked 79.9 hours, my federal withholding was $200.

Thanks again, and let me know if any other info is needed to help address this.

dandarc

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Re: Federal income tax withholding higher than estimates.
« Reply #4 on: June 03, 2015, 09:59:15 AM »
You might want to check what is actually on your W-4 - there is also a box for "additional withholding".  Maybe you or someone else put a number in there back when you were hired?

I'm getting ~$147 for federal withholding when I plug these numbers into paycheck city for single / 2 allowances.


MDM

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Re: Federal income tax withholding higher than estimates.
« Reply #5 on: June 03, 2015, 10:01:35 AM »
Regular hours at $16.50/hour: 80
Overtime hours at $24.75/hour: 8.4

Gross Pay: $1,527.90

Federal Income Tax: -$247.54
Social Security: -$93.73
Medicare: -$21.92
GA State Income Tax: -$81.28

Medical: -$28.58
Dental: -$3.70

Net Pay: $1,051.15

That is way too much federal tax withheld.  I didn't look at state tax, but aside from that see the table below for what your tax bill should be (based on that paycheck times 26):

CategoryMonthlyCommentsAnnual
Salary/Wages$3,310$39,725
Pretax Health Ins.$62$743
Pretax Vision/Dental Ins.$8$96
FICA base salary/wages$3,241$38,886
Federal Total Inc.$3,241$38,886
Federal tax$3192015 rates, S, stand. ded., 1 exempt.$3,827
State/City tax$119Guess, using 5.00% * Fed. Taxable$1,429
Soc. Sec.$201Assumes 1 earner paying$2,411
Medicare$47$564
Total income taxes$686$8,231
Income before other expenses  $2,555$30,655


Filing Status11=S, 2=MFJ
# of earners1
Total Income$38,886
Std. Deduct.$6,300
Act. Deduct.$6,300
# Exempt.1
Exemption$4,000
AGI$38,886
Taxable$28,586
Tax$3,827
Tax after n-r credit$3,827
# Children <170
Child Tax Cred.$0
EIC$0
Net Tax$3,827
Monthly$319
Mtg. Int. (guess)$0
State tax$1,4295.%
Prop tax$0
Charity$0
Item. Deduct.$1,429

Definitely worth a call to your payroll department to ask for details.

matchewed

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Re: Federal income tax withholding higher than estimates.
« Reply #6 on: June 03, 2015, 10:04:47 AM »
Between dandarc's info and yours you may want to see if you're accidentally having an additional $100 being withheld in you W4.

dandarc

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Re: Federal income tax withholding higher than estimates.
« Reply #7 on: June 03, 2015, 10:07:13 AM »
Something else to look at - I get close to that number if I check "weekly" instead of "bi-weekly" - maybe someone made that error when setting you up in payroll - seems like they'd set everyone up the same, but if their software requires the selection to be made for each individual employee, who knows?

NomadMustache

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Re: Federal income tax withholding higher than estimates.
« Reply #8 on: June 03, 2015, 10:11:06 AM »
Thanks again, dandarc if only for confirming that I am not insane and this is legitimately strange.

I spoke with the HR department a while ago and reviewed my original W4 on file and there is nothing in the additional withholding box.

MDM, thanks for all the data.

Payroll functions at my company are handled by the dreaded ADP. Due to a glitch, they weren't taking out medical and dental for a few paychecks when they should have. Now I'm covering those double for my next few paychecks. I have a good handle on my cashflow, so I can manage that, but I've noticed that the second time they're charging me for medical and dental doesn't have the fine print that says it's pretax.

Obviously, that's disconcerting, but it shouldn't make such a huge difference, should it?

Also, any idea on if I should contact ADP directly versus my own HR department?

dandarc, thanks very much for the weekly/bi-weekly point. I think you may have hit the nail on the head here. My position is maintenance translator, so my department is in the plant, where they're paid weekly, but I spend most of my time in the office, where we're paid bi-weekly. I'm betting they changed my pay to bi-weekly, but not my withholding. I will confirm with HR and post the results here.

Again, many thanks to everyone!

NomadMustache

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Re: Federal income tax withholding higher than estimates.
« Reply #9 on: June 03, 2015, 02:43:15 PM »
HR just got back to me. My withholding is being done biweekly, which is correct. Apparently, due to abnormally low withholding earlier in the year, it's making up for it now. The overall withholding rate calculated for everything since January is 12%.

Also, the medical and dental adjustments done due to ADP's glitch are also pretax, though ADP's format payslip doesn't put an asterisk next to them.

If I'm not being dumb to believe this, then I'm dumb to stay in America. I've already lived abroad, have few possessions, and seem to have grown accustomed to the Foreign Earned Income Exclusion. I guess it's time to get out again.

Thanks again to everyone for the help. I'm pretty young and this is the first serious job I've held in the States. I hope I can be as helpful in another part of the forums!
« Last Edit: June 03, 2015, 02:48:03 PM by NomadMustache »

dandarc

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Re: Federal income tax withholding higher than estimates.
« Reply #10 on: June 03, 2015, 02:48:57 PM »
So they screwed up payroll, and this is how they're fixing it.  Guess that's better than not fixing it, but an urgent-flagged email with this info or similar would have been nice. 

I can't remember ever having an error on a paycheck, but if you're not being told about it, maybe I wouldn't have known either.  Self-employed now, so if my "withholding" gets screwed up, it is 100% on me.  Good luck sir.

NomadMustache

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Re: Federal income tax withholding higher than estimates.
« Reply #11 on: June 03, 2015, 02:53:43 PM »
dandarc, help a newbie out a little more. You say, "So they screwed up payroll, and this is how they're fixing it." Are the withholding rates actually determined by the company and not by the IRS? And if so, do you happen to know if it'd be my HR department to blame, or ADP?

Forgive my ignorance and thanks again!

dandarc

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Re: Federal income tax withholding higher than estimates.
« Reply #12 on: June 03, 2015, 03:08:34 PM »
dandarc, help a newbie out a little more. You say, "So they screwed up payroll, and this is how they're fixing it." Are the withholding rates actually determined by the company and not by the IRS? And if so, do you happen to know if it'd be my HR department to blame, or ADP?

Forgive my ignorance and thanks again!
The IRS publishes the withholding tables and rates.  It is up to your employer to properly do the calculations and withhold the right amount.  So either your company, or ADP screwed this up somehow.  Good they are correcting it - if it had gotten a whole year with lots of people being under-withheld, they'd have a riot on their hands when tax-time rolls around.  Probably have a bit of one just with the increased withholding to correct as it is.

NomadMustache

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Re: Federal income tax withholding higher than estimates.
« Reply #13 on: June 03, 2015, 03:30:56 PM »
Many thanks to everyone who contributed, and dandarc for holding my hand till the end. This answers all the questions I've been asking for weeks, which my parents, friends, coworkers, and Reddit couldn't answer. I knew I signed up for this forum for a reason.

I'll leave the thread up for anyone with a similar question to stumble upon. I consider it a closed case, though.