63 votes
Accepted

Payroll tax on wheat given as wages

The CPA is mostly correct. Her use of "in kind" may be confusing, but it appears that while our gut would call this "bartering" and refer to the rules regarding same, there's a different set of rules ...
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27 votes

Why do I have to pay Medicare payroll deductions while I am retired if I am still working?

This is something that many people misunderstand. Nearly everyone who works in the U.S. is required to pay Social Security and Medicare taxes (sometimes called payroll taxes or FICA). These are not ...
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27 votes
Accepted

How much do I withhold for an employee receiving $2000 every two weeks?

For the federal tax, start by looking at IRS Publication 15, the Employer’s Tax Guide. The withholding tables that you would use are in IRS Publication 15-T, Federal Income Tax Withholding Methods. ...
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20 votes

Opting my child out of SS taxes?

The good news is that he probably won't be required to pay SS taxes. The bad news is that the reason will be because he can't get a job without a SSN. You don't get to just opt out of the social ...
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  • 51.6k
19 votes
Accepted

Incorrect FICA withholding by my employer

The short answer is that yes, you are responsible for making the FICA taxes whole. Note that you're not being charged anything you weren't already owing; you in fact got to have some of the money ...
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  • 35k
19 votes
Accepted

How do payroll-deducted taxes get sent to the IRS?

The money gets sent to the IRS through the EFTPS system. Depending on the amounts, the employers are required to deposit it on a monthly/semi-weekly basis, so they don't get to keep the tax money for ...
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  • 131k
19 votes

Do I need to pay medicare/social security as full-time employee but with a business on the side of which I'm the sole owner/employee?

(Your situation is not unique: lots of people have part-time "sole proprietorship" side jobs.) Any revenue from your mobile app business is... income. Therefore you have to pay tax on it. Even if ...
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  • 49k
18 votes

Opting my child out of SS taxes?

Not getting SSN has nothing to do with his/her liability to pay SS taxes. It just makes the life more complicated and you forgo your own tax benefits that you must have child's SSN to get. To request ...
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  • 131k
18 votes

Wage difference in pay period for same weekly hours worked

Your reasoning is sound, and you are correct. What most likely happened is that they withheld as if you earned all that within one pay period. That could be someone on the payroll end not doing the ...
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  • 64.6k
17 votes

Why might Social Security employee deductions from paycheck vary across pay periods?

Social Security tax only applies to the first $118,500 you earn in a year. See the Social Security Administration's website for more info. You should see a 6.2% increase in after tax earnings now. If ...
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  • 1,230
17 votes
Accepted

What is the purpose of Social Security and Medicare deductions from my paycheck?

These two items (social security and taxes) should have also been withheld from any other positions you held previously. Both these items cover you in the future. Social security when you reach ...
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15 votes
Accepted

Understand 401k contribution

While you are losing a lot of monthly take home income, you are gaining a tax advantage, increasing your income, and net worth. Every two weeks (two months per year you will get three paychecks in ...
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  • 75k
13 votes

What is the purpose of Social Security and Medicare deductions from my paycheck?

From Socialsecurity.gov on Medicare: Medicare is our country’s health insurance program for people age 65 or older. Certain people younger than age 65 can qualify for Medicare, too, including ...
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  • 10.1k
13 votes
Accepted

Why my bi-weekly salary after taxes doesn't sum up my yearly income

In some months there are three biweekly payments. If you multiply $3846.15 by 26 (the number of biweekly periods in the year) you get $99999.90. I wouldn't worry about the extra ten cents.
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  • 30.8k
12 votes
Accepted

What happens If I Overpay Social Security Taxes?

Yes you will get back the extra money at tax time. You are not able to adjust the withholding. Each employer will pay their share, and not get a refund, but at tax time, you'll get back any excess ...
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12 votes

With regards to a national insurance refund, what is my Work or Clock number?

First, please make sure that this letter from HMRC is genuine and not some kind of scam. It probably is ok, but make sure that the return address you are sending to is a genuine HMRC address, e.g. by ...
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11 votes
Accepted

This is my pay stub. Am I paying too much?

This doesn't look particularly unreasonable, but a few notes: He might be somewhat over-withheld for his taxes because he's claiming 0 federal and state allowances. In other words, his employer may ...
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  • 1,098
11 votes

Payroll tax on wheat given as wages

Conceptually, you should think of it like this: You issue your employee a paycheck, and your employee then turns around and purchases the amount of wheat from you which equals the entire net amount of ...
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  • 45.7k
10 votes

Does an employee have the right to pay the federal and state taxes themselves instead of having employer doing it?

You can file a revised W-4 with your employer claiming more allowances than you do now. More allowances means less Federal tax and (if applicable and likely with a separate form) less state tax. This ...
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  • 13.8k
10 votes

Payroll tax on wheat given as wages

Farm income is a separate beast under Schedule F. There may be a basis for the CPA'S assertion in regards to a farm-income concept of "commodity wages" though I don't have the expertise to ...
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  • 8,251
10 votes

Understand 401k contribution

Using the numbers provided in the question, contributing $260.42 to 401(k) reduces the federal income tax withheld by $57.29. Thus the marginal tax rate is $57.29 / $260.42 = 22%. Furthermore, $260.42 ...
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  • 3,074
9 votes
Accepted

Would I make more if paid weekly instead of monthly?

You seem to be very confused about taxes. The withholdings from your paychecks are just the result of a reasonably educated guess of what your total tax liability will be at the end of the year. ...
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  • 48.6k
8 votes
Accepted

Recovering over-contribution to Social Security between two employers?

This is a common occurrence when somebody has multiple jobs in one year. The employer can't know if you have reached the annual limit. They know to stop when you have hit the maximum for their company,...
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8 votes

Simple Tax Question Regarding Bonus Payment

Assuming you still have all the extra money they gave you, I think the best solution would be for you to pay them back immediately. I think this makes you look the best in the eyes of your employer. ...
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  • 45.7k
8 votes
Accepted

Is insurance compensation for lost wages taxable (in the U.S.)?

Yes, wages are taxable, and insurance payouts for lost wages are also taxable. They aren't required to withhold taxes, but they will give you a 1099 (if under $600 they aren't required to file a 1099,...
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  • 64.6k
8 votes

How much do I withhold for an employee receiving $2000 every two weeks?

For California it's the EDD (Employment Development Department) which will have the state withholding info, including tables. There are different types of employers, so look up your type and the ...
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  • 1,396
7 votes

How do I calculate my W-4 deductions when I want to keep $145 more of each paycheck?

Generally the advice is that each allowance on the W-4 represents a personal exemption amount. In 2016 that number is $4,050. A person that takes the standard deduction and exemptions for ...
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7 votes
Accepted

Clarification on getting paid from a company which filed for Bankruptcy?

If you are actually an employee and your employer goes bankrupt, you're first in line to recover money from the bankrupt company. Assuming that the company has some assets that can be sold off, you ...
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  • 20.4k

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