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I am about halfway through a 3 month summer internship in Bellevue, WA. My pre-tax bi-monthly paychecks are ~$3000 (6k/mo). However, I pay ~$815 in taxes each paycheck. This comes to about 27% in taxes, which makes sense since I am being paid hourly what would equate to about 80k/yr salary. However since this is only a 3-month gig I will only be walking away with ~$18,000 pre-tax (~$10,800 post-tax) at the end of the internship.

I am a Utah resident and I plan to do my final year of my degree at my local university following the internship. The following 9 months I want to be minimally employed, focus on school, and live off the money earned. So, my yearly earnings will likely be well below $35k.

From each paycheck my taxes are broken down as:

  • ~$190 : OASDI
  • ~$45 : Medicare
  • ~$580 : Federal Withholding

It seems that a 27% tax for <30k/yr of earning is pretty steep. I understand that in ~9 months I can file a tax return and will probably get a large return, but I need every penny I can get now since I am planning to live off it when I return to Utah. I am not a dependent of my parents.

So:

a) Can I somehow lower my taxes since I wont end up making very much money this year? (I think I only put 1 exemption on my W4)

b) Can I get money I was already taxed back before "tax season"?

c) Are all these tax percentages correct and am I not actually being overtaxed?

d) Will I owe the state of Utah a ton of income tax when I return?

FYI: I don't know much about the tax system at all. I just confusingly fill out boxes on the W4 and 1040 and such and am usually taxed appropriately.

marked as duplicate by keshlam, JoeTaxpayer united-states Jul 9 '16 at 14:45

This question has been asked before and already has an answer. If those answers do not fully address your question, please ask a new question.

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Welcome to the working world. I will answer these a bit out of order.

C) Your withholding has almost zero chance of being correct. Just about everyone has to pay or gets a refund. I typically shoot for +- of $1000, and that is tough.

A) Your W-2 is where you adjust the amount of tax that is withheld. You should fill out a new one as soon as possible. You can use a paycheck calculator to figure out the proper tax that should be withheld.

B) No.

D) Yes you will owe Utah state tax. See this site.

The rub of this all is that you may have to pay Idaho tax prior to being refunded your Federal. If you want to avoid this file your federal return as soon as possible (Goal: File by 7 Feb). You should have the return in 3 weeks or less (presuming you are owed one). That will give you plenty of time to file and pay any Idaho tax owed.

I say all of this because you may be tempted to go to a tax preparation shop and take an advance on your income tax return. Those loans are for people that hate money and are designed to tempt the foolish. They are only slightly better than payday loans.

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    You mean Utah instead of Idaho I presume? – Samuel Davidson Jul 8 '16 at 20:02
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    The W-2 is the form your employer sends you at the end of the year to tell you how much was withheld. The asker correctly identified the W-4 as the form for changing your future withholding. – Brythan Jul 8 '16 at 22:02
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You're not being over taxed, the withholding is just aggressive. Employer's don't know your whole tax situation, all they can go on is the amount they pay you minus deductions then extrapolate that to an annual number and withhold according to your W4.

You could ratchet up your W4 exemptions and this will help your current withholding. When you do your taxes next April this will all shake out and you will likely receive a large refund.

It's also worth noting that your federal withholding, given the numbers above, is just about 19% not 27%; which does match the federal tax table if your annual income was $72,000 as your semi-monthly paycheck indicates. That should be closer to 14% at an annual income of $36,000. The medicare related taxes are flat amounts. So really you're talking about an approximately 5% discrepancy on the $18,000 you'll earn during this internship; or about $900.

If you feel like you're being overtaxed, welcome to paying taxes.

  • It's a lot less stressful if you remember that tax money was never really "yours" in the first place. The law could have been written to make it a straight payroll tax on the employer. But by passing it through your hands, they've given you a chance to explain why some of that money should wind up in your pockets instead, due to the various social goals designed into the tax system. Adjust the W4 and try again... but it can take years to get that dialed in, and eventually you'll start needing to factor in investment income expectations and that sort of thing. – keshlam Jul 9 '16 at 13:57

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