I am currently working part time as an installer for a woodworking shop. My hours vary greatly. I might work 0 days in a week or I might work 40.
I worked 90hrs in the time frame of about three weeks before I got around to filling in a time card to get paid. Mostly my bad, but it was no big deal to me as I felt confident I would get paid and I did.
I id ask the owner if putting in for so many hours lumped together would hurt me tax wise and he said no.
As I looked through my pay stubs this morning, I have realized that the percentage taken out and taken home is all over the place and it seems that the % of deductions is highest as the numer of hours worked is the greatest.
I haven’t had payroll in 15 years and can’t remember the last w-2 job I had. I’m in NY and pay Fed withholding, SS, Medicare, and State withholding.
From the looks of it, I got hit for a good hundred $ by lumping those 90 hrs together.
I have not yet spoken to my employer or his bookeeper, but it is being suggested that I get paid every 2 weeks. Now in the past 2 weeks I put in close to 90 hrs again.
Something doesn’t seem right.
Can anyone shed some light on this for me?
“When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking.” — Sherlock Holmes, 1896
Replies
The tax deduction schedules assume that if you make 90 hours in that pay period, you will have the same 90 hours in every pay period all year. How else could they structure that table?
Your tool for managing your withholding rate is the w-9 or something like that. Check with your tax advisor to find out how many exemptions to claim.
'snot the empoyers fault. They take out based on the charts the govt gives them. The deductions are that much with 90 hours as though you earned at that rate annually, pushing you into a hiigher bracket. You get it back when you file end of year if due you.
You can moderate or control this to some extent by claiming up to one more dependent on your W form to employer than you will claim on your actual 1040
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Paul, and Blue,
So to understand what you guys are saying is that my assumption is correct; that I basically pushed myself into a higher bracket by allowing my employer to lump up my hours.
So in order to keep the rate of deductions lower, I should ask to not get paid for anymore than 40 hours at a time?
You can moderate or control this to some extent by claiming up to one more dependent on your W form to employer than you will claim on your actual 1040
Wouldn't that put me in the position of owing at the end of the year? I'd rather not....
"When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking." — Sherlock Holmes, 1896
"Wouldn't that put me in the position of owing at the end of the year?"Possibly. Tax planning is a detailed subject. Personally I'd prefer top owe them than the other way around.but if you are having weeks of unemployment, then it is unlikely that you would be owing them
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The deductions are that much with 90 hours as though you earned at that rate annually, do they take out by hour or how much you make in money?
They look at how much money you made that pay period. and compare it to the chart, then do the deduction the IRS figures show.But as Phil pointed out, there are ways the employer can refer to different charts, if they are up to it.
For instance, if you make ten grand a month, but they are reading from the ten grand a week column, they will be taking out based on a higher annual.
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Best advice- might be to NOT wait 3 weeks to turn in a time card! employer could maybe have handled things several different ways---- but SHOULD they? ME?- I would have phoned in the 90 hours to my payroll service-and however THEY figure it out-is how it's gonna be.
when we have employees-- everybody gets paid weekly--so If I ever phoned in 90 hours for somebody- the service would figure it as 90 hours in one period-( of course I would then probably have found myself paying 50 hours of overtime-- this is a good thread to remember!)
stephen
Haz, your are spot on, I shouldn't have waited. I didn't need the money and because it didn't seem like my hours were adding up.........I waited. Plus the fact that the employer wasn't exactly throwing time cards at me.
And..........I rarely go to the shop and when I do it is irregular, so it is nearly impossible for me to play along with the hand in the time card on..........
The bookeeper has indicated to me in writing that I will be paid bimonthly. In the past three weeks I am at 90 hours agian. The shop employees are paid weekly.
Tell me I'm nuts to think I should be paid weekly as well. Boss asked me how I wish to be paid. I told him I will mail my hours in at the end of the week and I want a check cut when the bookeeper gets it.
I'm too used to billing.
"When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking." — Sherlock Holmes, 1896
bimonthly also has withholding tables so that the taxes withheld are proper and not computed based upon one week.
Quantum materiae materietur marmota monax si marmota monax materiam possit materiari?
Thanks, your advice has been very helpful.
I spent a little time looking at tax tables and such this afternoon. I will have a conversation with my employer this week.
His "book keeper" is the wife of a local builder contractor, as well as my employers partner from what I have learned. Other then the fact that this guy owns the building that my employer has his shop in, I know little of the relationship.
I'm thinking maybe he needs a "bonafide" book keeper.
"When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking." — Sherlock Holmes, 1896
on my payroll service- I pay a weekly fee plus so much per check-- like maybe $1-1/2--- so paying you bi-monthly your employer only gets hit for24 fees----as opposed to 52 fees not a big deal--seems like it would be simpler to pay everybody weekly-- or Everybody bi monthly roofers on the other hand-- you CAN'T pay bi-monthly- you pay them weekly,on friday-- they are broke by monday-and by tuesday they are asking for "advances" to have ciggarettes untill friday---- NO way they could last 2 weeks between checks, LOL
Stephen, in NY we have a law which says that hourly workers have to be paid weekly.
I do know what you mean about roofers. When I did that full time I had them lining up on tues morning for a private talk with me. What I thought was funniest, the ones that had money problems were the best roofers. Never could figure that out.
I have bought tons of ciggs I haven't smoked, not to mention water, gateraide and soda.
I used to pay for lunch on thursday, cause I was worried they couldn't last until friday!!
Dave
Maybe you should introduce the accounts payable lady to email.
yeah, lol. Considering she hand writes the address on the envelpoe...........
"When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking." — Sherlock Holmes, 1896
I use ADP and that's how I would do it too.
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for me 45 to 50 hours a week works best. the OT is nice and i don't loose that much of it to the gov't. it's all most not worth working more then 50. the f*****g gov't takes to much, and i won't work for Uncle Sam. i live in Illinois, hope this helps.
Eric, all that matters in the long run is how much you make during the tax year. By lumping 90 hours together you have done absolutely nothing to increase your taxes, but you may have inadvertently loaned the government some money for the short term. When you file at the end of the year, the actual tax you owe will be reconciled with what you have paid in as withholding, and you will either owe more or get a refund.
Extreme example: suppose in January you work a month of 80-hour weeks at $35/hour. Your gross income during that period will be $11,200 and your withholding based on $2800/week will be quite high, probably in the 28% tax bracket or something. You're looking like a doctor to the IRS, a big earner. Then suppose you get laid off and do no more work the rest of the year. At tax filing time you will declare $11,200 in income for a year... pretty much a pauper by today's standards... and the Feds will send you all of the withheld tax back. They might even send you more if you can get the earned income credit, not sure about that.
Anyway, you're all good....
That makes it understandable to me. Thanks.
In this economy, I'd rather not be giving out loans so I will see what I can do about my pay schedule.
"When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking." — Sherlock Holmes, 1896
You can reduce the amount withheld by using a higher number of exemptions on your W-4. IIRC you need to have paid 90% of the tax due by the end of the year in order to avoid fines. I would talk to a tax person about this.
Your employer could've been a bit more helpful by using a bi-weekly deduction table for that huge 90 hour check. This way the deductions would be spread over a two week pay period and be much lower amount of with holdings. You will get it back when you file taxes.They could have paid you with two checks, each for a different week. Again, the net result would be more in your take home pay.You could also change your number of dependants/deductions to a high amount. Do it in December when you will probably need the extra money back more than other times.
Quantum materiae materietur marmota monax si marmota monax materiam possit materiari?
Your employer could've been a bit more helpful by using a bi-weekly deduction table for that huge 90 hour check. This way the deductions would be spread over a two week pay period and be much lower amount of with holdings. You will get it back when you file taxes.
That is interesting to know.
Thanks
"When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking." — Sherlock Holmes, 1896
The simple solution to your problem is have the employer take out a certain percentage from your check for fed W/H. (if they will do it). You figure out the percentage and live and die by the decision.
That way if you get a small check for a week, you will have the same w/h as you do with a 90 hour check.
You get out of life what you put into it......minus taxes.
Marv
Yup,
If you get paid $5k in a week, the withholding charts assume you're making $250k a year so you're propelled into a higher tax bracket and you;ll have more withheld. Vice-versa.
As to the amount withheld, as others have mentioned you can take care of that with the amount of deductions you claim on your W-4.
I have a wife and 2 kids. When I signed up with my employer back in the yonder days, at the end of the year Uncle Sam owed me about an $8k tax refund. I upped my withholding from my actual family size of four to eleven. Now I skirt the exact amount owed after the April 15th reconciliation, some years I owe a few hundred, some years I get a refund for a few hundred.
W-4 is for withholding estimates only, the number you claim on your W-4 can be different than the true number of exemptions that you'll actually take on your 1040.
There is a Pub 919 that you can use to fine tune your W-4 withholding so you can get fairly close to zero tax owed or zero tax refund on your 1040.