The Taxman Giveth, the Taxman Taketh Away

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-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us

You determine that (indirectly) by the information you provided on the W4 form you filled out for your employer. If you said 'single' with no allowances your employer will withhold more than if you said single and 1 or more allowances. Also if you worked for more than one source (employer) then each source may under withhold, each not knowing about the other source resulting in the combined withholding being less than it should be for the combined income. If you would like to get your withholding to closer match your actual tax you should file a new W4 form with your employer reducing the number of allowances or asking for an additional amount to be withheld each pay period. The instructions should be with the W4 form.

Actually the refund your friend is getting is really her own money that was over withheld during the year. She, essentially gave the government an interest free loan. You on the other hand, have had full use of all of your money and since you now owe a small amount, you have received a loan from the government and now have to pay it back without interest or penalty if the amount is small enough. Between the two of you, you are actually ahead of the game so in this case the Taxman Giveth to you.

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-Ernie-

"H2o" wrote

Withholding from your paycheck is determined by what you report to your employer on a W-4, ie: single and 1, married and 5, etc. adn the withholding tables, or most common now, the software formula. So with identical wages and pay cycle, and identical W-4 allowances claimed, it's possible that different payroll programs withhold a different amount.

There are too many variables among people and payroll to compare. Withholding on smaller weekly wages is going to be different than withholding on that same amount paid bi-weekly, etc. so at the end of the year you have a different amount of tax withheld on identical wages.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Hey Paul, will you please expound on this. I was not aware of this and now you've peaked my interest. Thanks in advance.

Nathan

I only checked across one data field using Pub 15, but single claiming 0 making $26,000 a year: Paid weekly would have $61 per withheld, $3172 annually Paid bi-weekly would have $122 per withheld, $3172 annually Paid semi-monthly would have $131 per withheld, $3144 annually Paid monthly would have $251 per withheld, $3156 withheld.

The daily or misc tables throw it off even further.

The amount isn't significant, but it could be if the numbers were larger. Seems I remember the withholding tables were further apart in past years.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net