Asking for a friend. Pay day today, first of 2020. He’s a high income earner. Said an additional $500 was withheld in taxes from his paycheck and thought it was because he jumped into a new tax bracket. I explained that your witholdings don’t automatically adjust and that since this pay period was for hours worked in 2019 wages from annual raises are not reflected in this pay period. Turns out the increase is mostly in social security withholdings. I did some reading and it looks like there was an increase where an additional $4800 in income is subject to the 6.2% SS tax but if I’m reading it right that should only equate to about $300/yr, not $500/pay period. Any insight or ideas on why this would have happened? Going to talk to payroll Monday but I was just curious if the group had any useful info. TIA!!
-
-
The W-4 changed a LOT. So I would look there first. I withhold at married zero and my withholding was identical to my last paycheck in 2019. If I had to fill out the new W-4, I think I would have screwed it up royally. You can't just set the number of exemptions anymore, you have to fill in a bunch of muckity muck and it goes into the payroll number scrambling system to withhold a random and unpredictable amount of money. At least that's what I think. -
Is it an increase compared to the last paycheck of 2019? If so, it's probably because he had maxed out the SS tax at some point in 2019 and now it is starting to be taken out again. Happens to me every year. For 2019, the tax was paid on the first $132,900 of income. Once you crossed that threshold, you didn't pay the tax anymore for the year, but it resets on 1/1.Steve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.Comment
-
-
Yes but why would the withholding be sooo much? Even if you’re at the max, total from each check should be around $329/pay period (2x/mo paychecks) not $500+Originally posted by disneysteve View PostComment
-
It depends on how much your friend is paid each pay period. Someone who earned $8064 (gross) each pay would have about $500 taken out for SS until they reached the maximum for the year. Then, it would go to 0. There is also another .09 ACA surcharge added on for incomes over 200k (this is in addition to the regular Medicare deduction).Originally posted by riverwed070707 View PostComment
-
Because you don't pay it evenly throughout the year. It's taxable (social security wages) earned that pay period x 6.2%. If this person is above the max, they paid $0 social security taxes in December because they maxed out earlier in the year and paid 0% the rest of the year. In the new year, you go from 0% back to 6.2%.Originally posted by riverwed070707 View Post
Take their taxable wages x 6.2% and that should be what they are taking out of first paycheck in January. If it went up $500 (mostly social security taxes) then they probably had $8k-ish in wages.
Comment
-
L2P and DS are correct. They withhold SS @ 6.2% of gross pay. If you make $1,000 a paycheck, they will withhold $62. If you make $100,000 a paycheck, they will withhold $6,200. Mine went from $0 for SS in Dec to $600+ in Jan. It will stop once I hit the max.Originally posted by Like2Plan View PostComment
-
Yep. Mine will be about $572 compared to the 2nd half of 2019 when it was zero.Originally posted by corn18 View PostSteve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.Comment
-
If he is a high income earner as you say, then he should have a CPA and get some advice from a professional based on all of his personal details.Comment
-
-
Agree. I’ve recommended this, as well as encouraged him to come here or find a forum.Originally posted by Fishindude77 View Post
thanks all for the insight. Helps a tonComment
Comment