Taxpayer asks:
The military retirement has the Federal Withholding higher than the State Withholding.
This seems incorrect to me. We don’t have anything special applied or not applied. We live Va., not sure if that matters. I hope that is enough information. I just think the military did some calculations wrong.
Taxgirl says:
If you’re not sure that it’s right, ask them to explain it to you.
I am not familiar with the tax structure in Virginia, but I will say that the withholding for federal purposes is almost always higher than the state withholding where I live (Pennsylvania). This is because our state income tax rate is around 3% whereas the lowest federal income tax rate is 10% (assuming that you don’t qualify for a zero rate).
Additionally, some states fully or partially exempt certain kinds of retirement pay. That might be contributing to a lower withholding.
Again, I think your best bet is to ask for an explanation. It may be the case that you need to make an adjustment!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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Taxpayer asks:
I was told that I would receive all my federal tax withholding for April, May & June. However, I just heard on the local news that it would only be $12 to $15, is that true?
Thanks for your advise,
Taxgirl says:
The Making Work Pay Credit will decrease the amount withheld from your paycheck by the applicable credit amount. For most individual taxpayers, this means there will be approximately $12-15 extra in your check each week. This could vary, depending on your pay and number of exemptions claimed; affected taxpayers may see less money withheld but should not see more.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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Taxpayer asks:
Dear taxgirl,
Can a taxpayer refuse to have the credit on their paychecks and receive
the full credit on their 2009 return? Also – are they changing the tax
table for 2009 to help with this credit?
Taxgirl says:
The answer to the last question is the easiest: yes, the tables have been changed so that employers can adjust the withholding. We received one of those lovely newsprint IRS pubs at our office just last week. If you are an employer and didn’t receive one – and want one – you can download it from the IRS website as a pdf. If you use an online or third party payroll service, the changes have probably already been made effective for April 1, 2009, but I’d confirm with them just to be sure.
The answer to your first question is a little more tricky. It’s one of those that I get to answer with a “lawyer answer”: yes and no. It’s no in the sense that the employee can’t go up to the employer and insist that the employer use the old tables – that would cause serious confusion (and I mean that, speaking as an employer). But if an employee is concerned about having to refund money at tax time because he or she is a dependent on another taxpayer’s return or other consideration (such as taxpayers with multiple jobs), the employee can certainly adjust his or her withholding on a form W-4.
You can make an adjustment on your form W-4 by changing the number of withholding allowances on the form. When you claim zero, the highest amount of tax will withheld. The more allowances you claim, the less tax will be withheld. So, if the goal is to have more tax withheld (since the new credit withholds less tax), adjust your allowances down. If you’re already claiming zero and still want to make an adjustment, you can indicate an additional dollar amount by writing it in on your W-4.
If all of this seems a bit confusing, give the IRS Withholding Calculator a whirl. Be aware that it’s not yet been updated to reflect the new tables. I expect that to happen on or about April 1.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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Taxpayer asks:
I do not understand your story about Geithner. If he worked for the IMF for all of those years, why was he not considered an employee?
Taxgirl says:
That’s a great question and I should have elaborated a little more in my post.
To be clear, the number of years that you are paid by a company does not necessarily determine your employee/employer status. You can be an employee for a day – or an independent contractor for 10 years.
But in this case, the length of employment did not have anything to do with Geithner’s withholding issue. It wasn’t his classification so much as his location. The IMF is an international organization. International organizations are not required to withhold FICA (Social Security and Medicare) taxes on wages paid. US taxpayers do, however, have to report what would have been classified as FICA wages on their income tax returns as self-employment wages and pay the resulting tax. It is a confusing issue, though one that, as I pointed out previously, you would think that someone familiar with money (or his financial advisors) would understand.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl! – Now on Facebook!
