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I started a new job and am trying to understand my paycheck. I understand the state, medicare, and social security deductions, but am confused about the federal deductions. Below is what my bi-weekly paycheck states.

Total Earnings - 3,846.40 
Fed Taxable Gross - 3,846.40 
OASDI Gross - ...
MEDI Gross - ... 

Federal Withholding - 785.73 
Fed MED/EE - ...
Fed OASDI/EE - ...
State - ...

Shouldn't my federal be the following?

18481.25 + (0.28*((3,846.40*26)-90750)) = 21073.042 ==> /26 ==> 810.50

What are the possibilities for why they are not taking the full amount?

1 Answer 1

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From IRS PUB 15 Employers Tax Guide For use in 2015 pages 44&45

Assuming Single and zero withholding allowances

  • Fed Taxable Gross: 3846.40
  • value of one withholding allowance: $153.80 x 0
  • sub total: 3846.40

    Over— But not over—                      of excess over—
    $3,579 —$7,369..       $710.90 plus 28%    —$3,579
    

so:

    710.90
    +74.87 = (3846.40 - 3579) * 0.28
    equals 785.77

Only off by a few pennies.

Since almost everybody takes the standard deduction (or itemizes to get an even bigger deduction) and takes a personal exemption those are built into the tax tables used by your employer. That is why it gets more complex to get the withholding right if a person has two jobs or one spouse makes a lot more than the other.

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  • Thanks for the reference. I wish there was an easy way to make it exact. Oh well. Commented Oct 1, 2015 at 16:27

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