One paycheck I earned only $77 and the govt withheld 9% of it.
Then I earned $2,000 and they withheld 26% of it.
Is everyone else experiencing this?
The less you earn, the less percentage-wise the govt withholds? The more you earn, the greater percentage they withhold?
At this rate, I fear that if I hypothetically would earn $8,000, they would withhold 100% of it. Do you see where this is going?
https://en.m.wikipedia.org/wiki/Progressive_tax
The withholding is calculated by extrapolating how much you’d owe in taxes if you earned this amount for every paycheck. If you know how much you’re projected to earn over the year, you could ask whomever handles your pay to adjust it to the correct percentage. Either way, come tax time it’ll be settled and you’ll either get back however much you paid in excess, or you’ll have to pay a bit extra at the end of the year.
If you know how much you’re projected to earn over the year, you could ask whomever handles your pay to adjust it to the correct percentage.
earnings are highly variable. the best I can do is I keep a spreadsheet, on which I calculate hourly and weekly and monthly averages. And I’ve only been there a month so not enough data to extrapolate from yet.
come tax time it’ll be settled and you’ll either get back however much you paid in excess
well thanks, they are deducting so much from me (26% ?!) that I certainly would be due a refund. Were it not for another tragic turn in my personal circumstances, in which the IRS has been garnishing all of my tax refunds since 2014 because of something stupid my ex-husband did in 2009 😡
Taxes can be complex, but is relatively simple for most people. Here’s how it works in general (assuming you’re a single tax filer):
- FICA taxes - 7.65% - Social Security and Medicare; applies to income up to ~$160k
- 0% income tax on the first $13.5k
- 10% on the first $11k
- 12% on the next ~$33k
- 22% on the next ~$51k
And so on. You’ll always pay FICA taxes, and the more you earn, the more of your income is taxed at a higher rate.
So if you were taxed 9% of your income, your employer probably estimated your yearly pay to be about $16k if the 9% is combined with FICA (if separate, it would be about $60k). If you are taxed 26%, I estimate your income at $210k if it includes FICA ($375k without). If you’re including state tax, then I estimate your income to be around $85k for a state like California with high state income taxes. I used this estimator to come up with numbers.
So your payroll department is probably estimating numbers similarly. If you think they’re doing it wrong, they probably don’t have enough information and you may need to provide them a W-4, which tells them how many deductions you expect this year (i.e. if you have a kid or something, you’ll get a tax credit, and can probably file as head of household instead of single).
If you provide income numbers, living situation (married, single with kids, single no kids), and where you live (just state is fine, unless your city has income tax as well), I can estimate your tax obligation and help you understand what payroll is probably doing. Withholding is based on estimated yearly income, so start with that.
garnishing
That sucks. I assume this is because of back taxes. If you have savings, you probably want to pay it off sooner than just having the IRS reclaim it through tax refunds. I would need to know more about the situation, but there may be interest involved. And my understanding is that the IRS usually takes a percentage of income as well, so it’s possible part of your “taxes” are back payments.
Regardless, I can probably help you minimize your refund at the end of the year if you provide me some numbers. Ideally, you’d talk to a tax professional because I don’t know anything about wage garnishment and that obligations you may have to the IRS.
This is how the tax rate works. As for your fear of them taking 100%, they won’t. The max single-payer tax rate, as of 2023, was 37%.
Thank you 🙏
What’s up with the down votes? This is literally the kind of content we should be boosting here. OP is clearly struggling financially and has probably never been taught how taxes work, and the primary goal should be to help people learn to manage their finances, not down vote because someone asks a tricky question.
I provided some info down thread, but OP, if you provide some more info (kids, expected annual income, state of residence, IRS garnishment details, etc), I’m happy to walk you through it. There may be a way to get you more cash each paycheck, but I need a lot more details.
has probably never been taught how taxes work
I worked at H&R Block as a tax preparer for the 2001 tax season 😄 So I do kinda understand taxes even though that was a long time ago and I don’t really think or care much about all the things I used to know anymore.
The last place I worked at in Nevada, I kept careful track and noticed 13% government deduction every paycheck. I noted it and figured my finances accordingly. No big deal.
But this California 26% government deduction is blowing my mind. It’s outrageous. And someone else in the thread said to rest assured that the govt would never withhold more than 37%. But even 37% max is ridiculous. That’s nearly half of our hard work turned into govt slave labor! Now when I’m at work I am consciously bitterly aware that 1/4 days I’m involuntarily working for free 😡
I assume you are hourly?
Yup
You might consider investing as well as taxes are lower there because you are theoretically helping the economy something like a high dividend ETF where you just put your money in and they pay you a dividend
I can’t even afford to change the oil in my car. Where the hell am I supposed to find extra money to invest?
Ah, i know that feeling
