Is now a bad time to mention that my federal taxes went up?

[coti]

I don't want to bother anyone with this, but I was surprised when I opened my paycheck covering the last of December, and it was for less money than the previous one.

Indeed- my federal withholding went way up, while my FICA withholding went down.

Now, I'm not the type of person that actually gives a shit about my own money. But, I do have to say that this makes me angry.

It's the moral bankruptcy of it all- that people who are doing at least OK financially are seeing their paychecks stay the same or are taking home more, while those who truly don't have a dime to their names are having our federal tax burden shifted to them.

Is there truly no sense of right and wrong left in our country anymore?

And it's this nagging feeling that people don't know, because the media, with their interests, aren't telling them. Many people to whom those few dollars do matter are going to see their paychecks go down and have no clue what happened, no understanding that those meager pennies taken from them were given to millionaires.

Our country's political discourse is so, so rotten. When things like this happen, it makes me feel like there's nothing at all that can be done to right the ship. It's just gonna keep sinking.

[nadinbrzezinski]

1. We said this was going to happen

not me... people far brighter than me said that the burden was shifted downwards.

And it angers me as well.

[The Velveteen Ocelot]

2. Why did that happen?

If it was for the last week in December it wouldn't have been related to changes for 2011. Your federal taxes shouldn't be increasing in any event for this year, either. Might there be some other reason for an increase in your withholding for that last paycheck?

[coti]

12. That's the main reason why it was surprising to me. I didn't think it would be until the first

check of the year.

Something in the law? I don't know.

[The Velveteen Ocelot]

16. Check with your employer -- it might have been a simple mistake.

Wages paid in 2010 shouldn't be affected at all by the change in the tax law.

[JDPriestly]

30. The Velveteen Ocelot: Here's how it works.

If you earn over a certain amount and under another certain amount, then the income that you would have received back as your share of Social Security taxes under the Social Security tax vacation -- becomes taxable income. So, you pay lower Social Security taxes and higher taxes to the general fund.

The tax vacation on the Social Security taxes is just a means to weaken the Social Security program. It is yet another theft from the middle class and poor. It never ends. And Obama is part of it. The Republicans are much, much worse, but Obama is only slightly better.

[Statistical]

32. Not true. SS taxes don't affect income taxes paid.

SS tax is 6.2% of gross income (4.2% in 2011).
Income taxes are based on gross income - deductions, exemptions, credits, etc. There is no deduction for SS taxes. SS taxes being 0%, 4.2%, 6.2%, or 8.2% will have no change on your taxable income and thus federal income taxes paid.

[JDPriestly]

33. You do not pay tax on what your employer takes out of your

check for Social Security. It is also reported separately on the form your employer gives you at the end of the year.

[northzax]

34. um, yes you do

check out a 1040EZ sometime, you calculate your tax burden by summing up your gross wages (box 1 on your w-2) subtracting the $5700 standard deduction (in 2011) you then look up your income on a table and voila! no step in there accounts for social security directly.

now to be fair, the standard deduction is roughly the most anyone can contribute to social security in one year. (ok, this year, 4.2% of 106,000 is 4400. normally the 6.2% rate means it's a bit less than the total)

seriously, check it out. if you are self employed, you can deduct the matching portion of your SS and Medicare taxes (what your employer would have paid) because you will be taxed on that portion of your SS when you receive it.

[JDPriestly]

36. Those who earn over a certain amount and also receive Social

Security have to pay taxes on their income beyond a certain amount. That would mean that, in a sense, Social Security is already means-tested and already reduced if you earn more than a minimum.

Some people could and probably do pay tax on their Social Security benefit -- those who are retired or over 70 and required to take Social Security and who also have a substantial income from another source or sources.

I don't understand why there is a discussion about introducing means testing. It already exists in that high-income people who take Social Security pay enough in taxes that they virtually don't receive Social Security.

I still disagree about whether you pay income tax on the portion of your pay that your employer deducts for Social Security.

I recall separately listing the amount of earnings, then the amount for FICA, the state taxes and not paying tax on the FICA for Social Security.

[northzax]

37. ah, I see what you are thinking

there are six numbers on your federal w-2. your gross wages (every penny) your SS and medicare wages (basically identical, but there are some sorts of income that are exempt from social security) then taxes withheld for income (based on the gross number and your declared exemptions) ss (6.2% of the SS income) and medicare (.05% of the medicare income) SS and medicare income can never exceed the hard cap of roughly $106k (this year) no matter how much your gross numbers are. SS and medicare wages will never be greater than gross wages, but they can easily be lower.

[Statistical]

35. Yes you do. When you get your W-2 take a look.

Your taxable wages are equal to total wages minues 401K, life insurance, medical premiums etc.

SS taxes do not reduce taxable wages.

You will have EXACTLY the same taxable wages under a 4.2%, 6.2%, or 8.2% SS contribution rate.

[MannyGoldstein]

3. The Democrats know that you'll vote for them

As long as they screw you make tough choices just a touch less than the Republicans do.

Wheeeeeeee...

[imaginary girl]

4. Yes, I noticed that too.

Funny it was never mentioned in all the coverage after the "deal" passed. Only thing I saw was about how the end of the "making work pay" credit would affect lower incomes. That's bad enough, but it seems there are other issues that will affect upper lower (or lower middle) incomes also ... (ie those that didn't have anything to do with "making work pay")

[dkf]

5. That makes no sense. Did you change your exemptions?

[coti]

15. No. I'm not sure why it applied to the last check of the year. nt

[BzaDem]

6. This is likely because the replacement of the making work pay tax credit with the payroll tax cut

hurts people who make less than 20k/year (or families making less than 40k/year). For example, if someone's making 10k/year, the payroll tax cut is only 200 dollars (versus the 400 from making work pay). So the net difference is 200/year.

However, your feedback should be directed at Republicans, since they are the ones that insisted on the swap. They would never have approved an extension to an Obama stimulus provision. Republicans make plainly clear their goal to make the tax system much more regressive than it is today.

[dkf]

9. Oh I didn't realize the Obama tax is in effect instead of the Bush tax.

[ThisThreadIsSatire]

10. the 'making work pay credit'

is in effect for tax year 2010 -- it just wasn't extended beyond that (as was the case from the original Stimulus bill...)

http://www.irs.gov/newsroom/article/0,,id=225793,00.html

[ThisThreadIsSatire]

7. I would check with your employer...

2010 taxes were not affected by the deal, only 2011 and forward...

[Hello_Kitty]

8. Hmm, why for the last pay of December?

The withholding should have fallen under 2010 tax laws. Is it possible that you'd exhausted your Making Work Pay credit?

This year if you earn less than $20K you'll see a bit less in your check because of swapping MWP for the payroll tax holiday.

[The Velveteen Ocelot]

14. I thought the Making Work Pay credit was only for 2010 in the first place?

And even so, a 2010 paycheck shouldn't show an increase in withholding because the tax legislation affects only 2011 taxes. I just looked at my last paycheck and there was no change in withholding other than the usual small variations based on other factors.

[Hello_Kitty]

24. Half of 2009 and all of 2010.

Still, it was dumb of them to not take into account the disparity for low wage workers in a tax compromise that was called stimulative.

[Statistical]

11. Last of December? Sounds like a fuck up by your employer.

No tax code change in December.

Also there was no change in federal taxes DUE so witholding is kinda meaingless. Submit an modified W-2 to make your witholding anything you want.

[dkf]

13. What if it's for hours worked in December but paid a week later?

That is how my paycheck works too...delayed I mean

[coti]

17. New "YTD" columns were started. Don't know why, or what that means.

And I don't think it matters, really. It starts this paycheck or the next one. It does not seem much of an issue to me.

[The Velveteen Ocelot]

21. The amount of tax you actually have to pay isn't the same as your withholding.

You could end up being owed a refund if they withheld too much.

[ThisThreadIsSatire]

18. Doesn't matter (or shouldn't)...

as I believe somebody else touched on -- your tax is your tax, regardless of what's withheld. If they withhold extra, you get a refund. If they don't withhold enough, you will owe.

But rest assured, the old laws were in effect through 12/31 -- the new deal (if you'll pardon the expression) kicked in as of 1/1/11.

[Xenotime]

19. I recall MSNBC reported Biden saying paying higher taxes is a patriotic duty

[coti]

20. Just for poor folks, though, I guess? nt

[niceypoo]

25. You recall wrong

Biden said that it is patriotic for the rich to pay more, not the little guy.

[imaginary girl]

22. They changed the federal tax tables for 2011

According to the financial people at my University. They said many people would see their paychecks decrease as a result. I'm assuming they used the new tax tables for us (even though the pay was for the entire month of December) because the check was written in January.

This is not just a Making Work Pay issue. This is larger and will affect more people, even if they make over 20,000.

[niceypoo]

23. Tax cuts got us into this mess

And more tax cuts will get us out of it?

[doc03]

26. Don't know why but the federal withholding on my January

pension check increased from $30.68 to $63.18. My pension is a fixed amount and I never changed my withholding options. Since I am retired I don't benefit from the payroll tax cut either.

[Statistical]

27. Making Work Pay Credit was temporary and expired at end of 2010.

It is $400 per year and witholding tables were updated to reflect that. $400 /12 = $33.33 more in federal taxes per month.

[doc03]

28. That is a pension check, the Making Work Pay wouldn't

apply anyway.

[JDPriestly]

29. coti, that is why I opposed the holiday from the Social Security tax

There would have been other ways to give tax relief to those with low incomes.

But the Social Security holiday just transfers money from taxes that would have gone to the Social Security trust fund into the general revenue.

It's a terrible, terrible idea. Obama did not have to agree to this. He showed his true colors. He doesn't like seniors that much, and he does not understand why people need Social Security. After all, he will never need it and neither did his father, mother or most likely, also his grandmother.

[hfojvt]

31. it's kinda early

I, myself, don't get paid for another week and a half. But even if withholding changes, my taxes will not go up, at least in one sense. They will still be zero for Federal Income taxes. I won't get the $400 extra refund which is an effective tax increase but not to the point where they are greater than zero. In fact, I will still get an EIC of about $70-90 making my net taxes negative, just not as negative as they have been in the last two years.

[Quantess]

38. No, there truly is no sense of right or wrong left in this country.

This is just yet another example of how low the USA has sunk.

[Nikia]

39. I had more deducted too as did most people I work with

I make more than $20,000 but there are three of us being supported with my salary. This affects a lot of people, not just people who think of themselves as poor.

[Yoda74]

40. When were you PAID?

You said the pay covered the last part of December but you didn't say what your pay date was. Your pay is taxed when it is received, not when it is earned. Therefore, if this was a January paycheck for hours worked in December, it would be taxed at 2011 rates.

[SoCalDem]

41. My husband's went UP $23.00 (net pay, that is)

We will get hammered this year though , because he started collecting SS & I have had my measly pension for a full year (last year I only collected for 5 months of the year)