Taxes: Federal Income Tax

[AndrewSternberg]

Here is another tax question:

My first paycheck (from 1 week of 40 hours) was $470. The amount taken out for Federal Income Tax was $24.88.

My second paycheck (from weeks 2 and 3, 80 hours) was $940. Twice the amount. However the amount taken out for Federal Income Tax was $94.27, which is more than twice $24.88.

Why?

Edited June 25, 2005 by softwareNerd

[Betsy]

My first paycheck (from 1 week of 40 hours) was $470.  The amount taken out for Federal Income Tax was $24.88. 

My second paycheck (from weeks 2 and 3, 80 hours) was $940.  Twice the amount.  However the amount taken out for Federal Income Tax was $94.27, which is more than twice $24.88.

Why?

"That's called "progressive" taxation.

The higher your annualized income, the greater PERCENTAGE of tax you pay on it.

[dark_stranger]

Here is another tax question:

My first paycheck (from 1 week of 40 hours) was $470.  The amount taken out for Federal Income Tax was $24.88. 

My second paycheck (from weeks 2 and 3, 80 hours) was $940.  Twice the amount.  However the amount taken out for Federal Income Tax was $94.27, which is more than twice $24.88.

Why?

It saddens me to have to help you understand this topic. In a just world this would be some cruel joke or fantasy.

Have you ever heard people complain that the more money you make, the more they steal? There is a reason for that complaint, and it is not just that x% of a larger income means more money lost. Rather, the tax system is graduated, meaning that your income is chopped into categories, and as you earn into the higher categories, the percentage they steal becomes larger.

Check out the IRS tax tables to see how this works.

Your wages, if consistently $940.00 every two weeks, would mean an annualized salary of $24,400.00. Looking at the tables above then, a single person would pay 10% on the first $7,000.00, plus 15% of any money over $7,000.00 but less than $28,4000. In your case, this will be $17,400.00 ($24,400.00-$7000.00). Fifteen percent of this number is $2610.00. Add the $700.00 from the first $7,000.00, and your total tax is $3310.00. Normally payroll services will prorate this over every check you have to lessen the burden at tax time. It is my experience that they will also try to err on the side of withholding too much. You should be able to adjust your withholdings so that the government isn't holding more of your money than it has to. If you try such a thing, I strongly recommend seeing a tax professional (CPA or tax attorney).

So in response to why they are withholding those particular amounts, I don't know. You do have a right to find out why though, and your payroll person is the one who can tell you.

So now you know the face of evil.

[Godless Capitalist]

Here is another tax question:

My first paycheck (from 1 week of 40 hours) was $470.  The amount taken out for Federal Income Tax was $24.88. 

My second paycheck (from weeks 2 and 3, 80 hours) was $940.  Twice the amount.  However the amount taken out for Federal Income Tax was $94.27, which is more than twice $24.88.

Why?

hmmm ... I think the previous answers missed the fact that Andrew's weekly income is the same in both paychecks. Therefore the percentage of tax withheld should have been the same.

Andrew, your payroll person may have made a mistake somewhere; you should sit down with them and go through the numbers. Don't worry, if they withheld too much you don't lose the money; you'll get it back when you file your taxes.

[Toolboxnj]

Find a cash job =)