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I notice that no matter how much pay I receive, my Federal Tax is always deducted the same amount.

On my regular paychecks, around $2000, it is $65 for "Federal Tax". But I received other smaller paychecks for bonuses or extra work not part of my contract, around $200 and again it is the same "$65" (or very close) deducted. Every single paycheck, be it a bonus, or extra work, larger amount than usual or less than usual, has been nearly this amount.

I thought normal behavior would take out some percent of the paycheck, not deduct the same amount every paycheck, for instance, if $65 is taken from $2000 then $6.50 would be taken from a paycheck with $200.

Is that normal federal taxes are being deducted at this same amount every paycheck?

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  • 2
    Tax questions require you tag it with a location.
    – JohnFx
    Aug 2, 2022 at 20:23
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    is that $2,000 for a week, two weeks, half-month, or a month? Aug 2, 2022 at 22:52
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    It should be some percentage, and $65 from a $2000 sounds really low to begin with. That corresponds to an effective federal tax rate of 3.25%, far lower than the lowest 10% tax bracket.
    – chepner
    Aug 3, 2022 at 0:53
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    That’s a worryingly low amount of tax withheld on a $52k annual salary, The same $65 withholding on “side” paychecks is even more worrying. Do you work remotely? Do they think you’re a contractor?
    – RonJohn
    Aug 3, 2022 at 10:36
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    Have you asked your employer about this? It may be expected because of their bookkeeping software.
    – Nosjack
    Aug 3, 2022 at 12:57

1 Answer 1

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Something isn't right there.

Payroll withholding for federal income tax uses an interesting but simple formula. It takes what you make in the current pay period, multiplies that by the number of pay periods in the year, and then taxes accordingly (also keeping in mind the number of exemptions you claim). So, if you make $1,000 this week and are paid weekly, the payroll tax withheld should work off the assumption you're making $52,000 a year ($1,000 times 52 weekly pay periods). Let's say next week though, you work overtime and receive $1,500. Payroll tax should be based on the assumption you're making $78,000 ($1,500 times 52 weekly pay periods).

If your employer is taking the exact same amount in taxes regardless of your gross pay then something's wrong, and if you aren't careful then it could be a problem for you. First, they're probably underpaying your federal income tax obligation, which means you're much more likely to owe money than receive a refund (or your refund will be smaller). Second, they're probably underpaying your Social Security contribution as well, which has a potential consequence on your projected benefits at retirement. Third, you may have tax issues with the state, because if the federal income tax withholding is wrong then the state withholding probably is as well.

I strongly suggest you talk with someone in your company's payroll or HR department to find out what's going on and get this fixed as soon as possible.

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  • Beginning in 2020 W-4 no longer has 'exemptions' (which in practice were often approximations to net excess deductions, or even more inaccurate approximations to credits divided by probable rate); now it directly adjusts for "non-job" income, excess deductions, and dependent credits. For overtime pay employer can withhold income tax as flat 22% rather than the usual extrapolated tax (as you describe), also for bonus (mentioned in Q) and most other non-regular pay. (But employee-half SS/Medicare is always flat 7.65% on everything up to the yearly SS cap.) Aug 7, 2022 at 1:51

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