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I'm currently working as a Software Engineer and I was worried because my withholding amounts seemed to have changed in between last year and this year. I started at my company on December 12, and I was paid my first paycheck on December 30th. My pay had $769.83 in deductions for this check.

However, as we moved to the new year, I started on a 2 week pay period. However, my deductions seem to be higher ($801.21) even though I have a smaller check and am paying on a faster basis. Is there any reason for this? I asked HR and she said it was because it was the beginning of the year and we pay higher fees towards then, but I've received my second check now and it still has the same, higher deductions.

First withholdings, Higher withholdings

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    A different assumed annual income may be in use for 2017. – quid Feb 8 '17 at 0:16
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    Just FYI: Your gross pay can be calculated based on the withholding amounts, which are now public – D Stanley Feb 8 '17 at 1:09
  • Thanks for that stanley, I was a bit worried about that happening. Is this problematic? Should I delete my post/remove links afterward? I'm fairly new in the job/"adult" world so I'm not sure how bad of an idea it is to have that generally public. – user1066886 Feb 8 '17 at 1:10
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    The only concern if anyone who views this question knows you personally, they will know how much you make. If that's not a concern for you then there's no issue. – D Stanley Feb 8 '17 at 1:12
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By my calculations from your withholding this year, you are withholding about $20 more federal income tax than necessary: $433 instead of $413. Of course, they may know something that I do not (e.g. quarterly or annual bonuses). I used the 2017 tax brackets, deduction, and exemption.

I wouldn't worry about last year so much. They probably figured that they were paying you more than any previous jobs were and withheld a little less than they would otherwise. They probably still overwithheld, so you should get a refund. Last year they almost certainly withheld incorrectly as they wouldn't have known how much you made the rest of the year. Weird withholding on your first paycheck and in a partial year are both normal.

This year presumably all your paychecks come from them, so they should be able to make a decent estimate of your income. Your federal income, Social Security, and Medicare taxes are consistent with each other. I don't know enough about California taxes to comment on those.

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Withholdings are determined by the number exemptions you put on your W-4, the amount of taxable income, and the pay frequency (twice monthly, biweekly, etc.) So if the withholding amount is different, then one of those has changed. My guess is that the paycheck you received on 12/30 was for a "unique" period (e.g. not for exactly 2 weeks) and thus the withholding amount is different.

With a first job it's difficult to know exactly how much to withhold. Your W-4 should give you a decent answer, but since it assumes the "standard" deduction, it may not be exact if you are able to itemize deductions because you have a mortgage, give to charity, have large medical expenses, etc. If you have more that the standard deduction, you might be withholding too much.

However, if that is the case, all it means is that you will get a tax refund when you file next year. Ideally you want your total amount withheld to be as close to your actual tax as possible, but most people like to be conservative and would prefer to overwithhold and get a refund than underwithhold and have an unexpected tax bill.

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If you started this new job close to the end of a year it very plausible that the annual assumed incomes are very different from 2016 to 2017. Using 24 pay periods your social security and CA state disability withholding amounts indicate very different annual incomes from 2016 to 2017. By my rough calculations (again assuming 24 pay periods) while your 2016 social security withholding indicated a higher annual income than 2017, your federal income tax withholding indicates a lower annual income in 2017. Given this discrepancy it's more likely that that your 2016 check is for an odd period which skewed the withholding amounts. I would assume going forward that your current withholding amounts will not change.

When you're first starting out with real employment it's important to remember that personal income taxation in the US is an annual, calendar year, endeavor. Whether you're an hourly or salary employee your employer does some calculation to come up with a presumed annual income from which to base your tax withholdings. You can file a W4 form with your employer to indicate the exemptions you're allowed (as well as a couple other possible bits of information). Your employer includes this information in its assumptions.

At the beginning of the following year you'll gather up all the forms W2 and 1099 you receive from your employer(s) and savings/retirement/investment accounts and compile all of this information in to your federal and state, where applicable, income tax filings. If your employer withheld too much based on your actual annual income you will receive a refund from the tax authority. Similarly, if not enough is withheld you'll owe a bit.

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