Different tax withholding for longer pay periods....? WTF?

Howdy. I'm a California tech contractor (I'm a technical writer) that just finished up a 5-week contract through an employment agency. Long story short: they apparently pay bi-weekly. My first check was for one weeks' pay, and was slightly in excess of $1500. The next payment for two weeks' pay was around $2600. Same hourly rate, same project, same everything.

I phoned this morning to find out what was afoot and the Chinese lady who does their payroll got all upset, insisting that 'the software do it all.' After a 20-minute wrangle I found out my next and last paycheck, again for two weeks, will be for another $2600. That leaves me about $800 shy of where I thought I'd be.

Is Federal or CA state withholding *greater* if you have a longer pay period? Am I being dumb? Is this a wrinkle in our tax code I've simply never run into before in 15 years as an IT contractor? Or should I continue to make a bit of a fuss if I want my money now, as opposed to an end-of-tax-year refund?

Reply to
PhilOssiferzStone
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You may also be shy of where you need to be with CA and the IRS.

Withholding tables assume that your income is steady throughout the year. Thus, when withholding was calculated for your first paycheck, it was calculated as if you would gross that amount every 2 weeks throughout the year. IOW, withholding was based on an annual income half of what it really is.

You should stash some cash where you can find it April 15, because you may wind up with a balance due. Estimate this amount by subtracting the amount withheld for income tax from the smaller paycheck from the amount withheld from one larger paycheck, then divide by 2.

It works the same with payroll clerks without accents.

Reply to
Phil Marti

There is no tax withholding for non-employees.

Reply to
Alan

As one moves up the payroll software food chain the ability to change the annualization factor for each tax is available to the end user. In your case if the software had this feature the HR lady could have entered 52 weeks as the number of pays in the year for your first check instead of the default

26 weeks (Bi-Weekly).

The method used by the software was to multiply your pay by 26, calculate the tax for the year and then divide that number by 26 to come up with the tax withheld for that pay period.

In any event the HR lady under withheld taxes for your first check.

As a practical matter changing the annualization factor even if available, is not performed that often in the real world.

Reply to
Haskel LaPort

But OP said he worked for an employment agency, not for the company who contracted with that agency. Therefore, the employment agency's responsibility is to treat him as an employee and withhold accordingly.

I hope the OP will respond and tell us if taxes were indeed withheld.

ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

You may be correct. I just assumed that "through an employment agency" meant that was how he obtained the contract. It is quite possible that he is an employee of the agency and subject to withholding.

Reply to
Alan

You can change the W-4 you have on file with the company. The lady is correct, every two weeks the computer software is making a calculation that assumes: your annual income equals gross pay times 26; withholding is adjusted for your filing status and allowances claimed. It (the software) doesn't know anything about other jobs, time spent unemployed, or if you itemize. That's what the W-4 is for.

Reply to
Brew1

Not same everything. In the first 2-week pay period you earned (e.g.) $1800. You were withheld based on annual pay of 26*$1800. In the second period you earned $3600, and were withheld based on annual pay of $26*3600, which is in a higher bracket.

Seth

Reply to
Seth

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