Lower Social Security Taxes
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- Tyek
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Lower Social Security Taxes
Wow,
I was surprised. Got my W2 and the social security tax is way down. I checked it out online and sure enough they reduced them this year. I guess I was too preoccupied with other things to realize it but was a nice surprise to see a couple grand back in my hands.
I was surprised. Got my W2 and the social security tax is way down. I checked it out online and sure enough they reduced them this year. I guess I was too preoccupied with other things to realize it but was a nice surprise to see a couple grand back in my hands.
When I was younger, I used to think that the world was doing it to me and that the world owes me some thing…When you're a teeny bopper, that's what you think. I'm 40 now, I don't think that anymore, because I found out it doesn't f--king work. One has to go through that. For the people who even bother to go through that, most assholes just accept what it is anyway and get on with it." - John Lennon
Re: Lower Social Security Taxes
Yeah this is what has been making the news left and right over the past couple months
They got a last minute extension to it until the end of February in December, but they still need to address it for the rest of 2012.
Essentially what it does is reduce the employees FICA tax from 6.2% down to 4.2.% (which is taxed on your first $116k or so of income).
Employers still play the full 6.2%.
They got a last minute extension to it until the end of February in December, but they still need to address it for the rest of 2012.
Essentially what it does is reduce the employees FICA tax from 6.2% down to 4.2.% (which is taxed on your first $116k or so of income).
Employers still play the full 6.2%.
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Re: Lower Social Security Taxes
tops out at $106,800. We had the solar install this year as well, it cost me A $65,000, but SCE gave me $6700 back and I get 30% back from the Green Program. Plus my bills are $25 a month now compared to a $500 a month average. Feels nice to get a nice return coming.Canoe wrote:Yeah this is what has been making the news left and right over the past couple months
They got a last minute extension to it until the end of February in December, but they still need to address it for the rest of 2012.
Essentially what it does is reduce the employees FICA tax from 6.2% down to 4.2.% (which is taxed on your first $116k or so of income).
Employers still play the full 6.2%.
Last year I had to clean out most of one retirement account to buy the properties around my parents house before the guy sold them to others. I got hit for a bunch when they pulled it out, then it became income on my taxes and turned a $2500 rebate into a $4000 payment to the government. I feel like they triple taxed me since I had to pay property taxes too.
Seeing that I get to pay a little less in taxes makes me feel a little better, at least until I get my bonus and see how much they tax that damn thing for. I never understood why bonuses are taxed so much higher then salary.
When I was younger, I used to think that the world was doing it to me and that the world owes me some thing…When you're a teeny bopper, that's what you think. I'm 40 now, I don't think that anymore, because I found out it doesn't f--king work. One has to go through that. For the people who even bother to go through that, most assholes just accept what it is anyway and get on with it." - John Lennon
Re: Lower Social Security Taxes
Yep you are correct - sorry meant $106k or so, not $116k or so.
To answer your last question -
The simple answer is employers are forced to follow IRS tax tables for payroll - they don't have a choice.
The only choice they have (which is at their discretion) is to choose to tax you at the supplemental rate, vs. the normal tax tables.
So... what does that mean?
Normal Tax tables:
IRS (and state taxes as well) has tax tables based on the exemptions you file on your W-4, that employers are forced to follow based on if you are bi-weekly, weekly, monthly, etc pay frequency.
So the problem with bonuses are they are generally very large compared to a regular check - so if you get say a $30,000 bonus - if you are normally a bi-weekly pay person - it's going to tax it as if you make $780,000 per year ($30,000 X 26 pay checks). This obviously would land you in the highest tax bracket - which would, after SS taxes, fed income, and state - will usually put you in the 42-51% range as far as taxes are concerned (35% percent federal, 7% give or take SS / Medicare (except 2011), and depending on state income tax in your state, it could vary (~9% in NYS, but 0% in others) or so.
Now - The employer has the option at their discretion to tax you at what they call the "Supplemental Rate" as well -
Which for Federal is a flat 25%, plus your SS / Medicare (another 7% - except 2011, would be more around 5%), plus your state rate - which some states offer a flat % as well - New York for example is 9.62%.
In this case it would lower your tax to around 40% or a touch over - which is lower than option 1 above - but still significantly higher than most people are used to seeing.
Unfortunately the IRS nor the States allow employers to deviate from the tax tables. The employees can recoup the tax on the bonus when they file their taxes - unfortunately the following year.
Hope that sheds a little light (I'm guessing your question was rhetorical, but I decided to answer it anyway!).
(PS I might have gotten a few the %'s slightly off in the above - so you correction nazi's don't kill me! - Just trying to illustrate the points in general - many people get confused on this question).
To answer your last question -
The simple answer is employers are forced to follow IRS tax tables for payroll - they don't have a choice.
The only choice they have (which is at their discretion) is to choose to tax you at the supplemental rate, vs. the normal tax tables.
So... what does that mean?
Normal Tax tables:
IRS (and state taxes as well) has tax tables based on the exemptions you file on your W-4, that employers are forced to follow based on if you are bi-weekly, weekly, monthly, etc pay frequency.
So the problem with bonuses are they are generally very large compared to a regular check - so if you get say a $30,000 bonus - if you are normally a bi-weekly pay person - it's going to tax it as if you make $780,000 per year ($30,000 X 26 pay checks). This obviously would land you in the highest tax bracket - which would, after SS taxes, fed income, and state - will usually put you in the 42-51% range as far as taxes are concerned (35% percent federal, 7% give or take SS / Medicare (except 2011), and depending on state income tax in your state, it could vary (~9% in NYS, but 0% in others) or so.
Now - The employer has the option at their discretion to tax you at what they call the "Supplemental Rate" as well -
Which for Federal is a flat 25%, plus your SS / Medicare (another 7% - except 2011, would be more around 5%), plus your state rate - which some states offer a flat % as well - New York for example is 9.62%.
In this case it would lower your tax to around 40% or a touch over - which is lower than option 1 above - but still significantly higher than most people are used to seeing.
Unfortunately the IRS nor the States allow employers to deviate from the tax tables. The employees can recoup the tax on the bonus when they file their taxes - unfortunately the following year.
Hope that sheds a little light (I'm guessing your question was rhetorical, but I decided to answer it anyway!).
(PS I might have gotten a few the %'s slightly off in the above - so you correction nazi's don't kill me! - Just trying to illustrate the points in general - many people get confused on this question).
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Re: Lower Social Security Taxes
Thanks for the answer, it was very interesting actually. it still sucks to see almost 50% of your bonus go bye bye but that makes it clearer.Canoe wrote:Yep you are correct - sorry meant $106k or so, not $116k or so.
To answer your last question -
The simple answer is employers are forced to follow IRS tax tables for payroll - they don't have a choice.
The only choice they have (which is at their discretion) is to choose to tax you at the supplemental rate, vs. the normal tax tables.
So... what does that mean?
Normal Tax tables:
IRS (and state taxes as well) has tax tables based on the exemptions you file on your W-4, that employers are forced to follow based on if you are bi-weekly, weekly, monthly, etc pay frequency.
So the problem with bonuses are they are generally very large compared to a regular check - so if you get say a $30,000 bonus - if you are normally a bi-weekly pay person - it's going to tax it as if you make $780,000 per year ($30,000 X 26 pay checks). This obviously would land you in the highest tax bracket - which would, after SS taxes, fed income, and state - will usually put you in the 42-51% range as far as taxes are concerned (35% percent federal, 7% give or take SS / Medicare (except 2011), and depending on state income tax in your state, it could vary (~9% in NYS, but 0% in others) or so.
Now - The employer has the option at their discretion to tax you at what they call the "Supplemental Rate" as well -
Which for Federal is a flat 25%, plus your SS / Medicare (another 7% - except 2011, would be more around 5%), plus your state rate - which some states offer a flat % as well - New York for example is 9.62%.
In this case it would lower your tax to around 40% or a touch over - which is lower than option 1 above - but still significantly higher than most people are used to seeing.
Unfortunately the IRS nor the States allow employers to deviate from the tax tables. The employees can recoup the tax on the bonus when they file their taxes - unfortunately the following year.
Hope that sheds a little light (I'm guessing your question was rhetorical, but I decided to answer it anyway!).
(PS I might have gotten a few the %'s slightly off in the above - so you correction nazi's don't kill me! - Just trying to illustrate the points in general - many people get confused on this question).
When I was younger, I used to think that the world was doing it to me and that the world owes me some thing…When you're a teeny bopper, that's what you think. I'm 40 now, I don't think that anymore, because I found out it doesn't f--king work. One has to go through that. For the people who even bother to go through that, most assholes just accept what it is anyway and get on with it." - John Lennon
- Canelek
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Re: Lower Social Security Taxes
I got a 16K performance bonus from Merrill Lynch in 2007...that was a big fucking tax!
Then of course, the next year....nada. Well, I don't need to explain why I didn't get a bonus in 2008. Asses!
I'm sure hoping for some decent returns this year due to the PMI, etc I pay with FHA loan... Chiropractor bills are killing me and I am still paying for the heat pump I put in last year!
Then of course, the next year....nada. Well, I don't need to explain why I didn't get a bonus in 2008. Asses!
I'm sure hoping for some decent returns this year due to the PMI, etc I pay with FHA loan... Chiropractor bills are killing me and I am still paying for the heat pump I put in last year!
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Re: Lower Social Security Taxes
On the plus side, we make enough cash we can complain about taxes!
When I was younger, I used to think that the world was doing it to me and that the world owes me some thing…When you're a teeny bopper, that's what you think. I'm 40 now, I don't think that anymore, because I found out it doesn't f--king work. One has to go through that. For the people who even bother to go through that, most assholes just accept what it is anyway and get on with it." - John Lennon
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Re: Lower Social Security Taxes
Haha, well, I do pretty well, but can certainly handle more income since I have many projects I want to do! And there will always be something to complain about.
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Re: Lower Social Security Taxes
I understand, I look at our income and wonder why we never have any money. Then again I have been to Belize, Costa Rica, Italy, Germany, Austria, Switzerland, Mexico and much of the US over the last few years, so that may explain it.
When I was younger, I used to think that the world was doing it to me and that the world owes me some thing…When you're a teeny bopper, that's what you think. I'm 40 now, I don't think that anymore, because I found out it doesn't f--king work. One has to go through that. For the people who even bother to go through that, most assholes just accept what it is anyway and get on with it." - John Lennon
- Aabidano
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Re: Lower Social Security Taxes
Staying away from the political side - SS in general I don't actually mind too much, last I looked the return on investment wasn't too bad as long as you don't croak too early. Meets other social needs as well without dipping into general revenue.
Aside from the politicians making themselves unfunded loans from it, it's a well managed fund.
We just got a notice no raises except for special circumstances across the board, ought to get a bonus though. Made my numbers with a hefty margin in 2011.
Aside from the politicians making themselves unfunded loans from it, it's a well managed fund.
We just got a notice no raises except for special circumstances across the board, ought to get a bonus though. Made my numbers with a hefty margin in 2011.
"Life is what happens while you're making plans for later."
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Re: Lower Social Security Taxes
Grats!
I'll feel a lot better in June when I have my heat pump/AC paid off. That has been essentially an extra car payment per month. Adjusting to home ownership expensive has been a series of financial lessons as well.
In retrospect, I am very, very glad I have not started on basement renovation due to scary contractor estimates!
Hoping that there is a work bonus in March and a pay upgrade in July due to recent high rating and possible band leap. Yeah, IBM has oddball times to do things... been slowly bleeding my checking account!
I'll feel a lot better in June when I have my heat pump/AC paid off. That has been essentially an extra car payment per month. Adjusting to home ownership expensive has been a series of financial lessons as well.
In retrospect, I am very, very glad I have not started on basement renovation due to scary contractor estimates!
Hoping that there is a work bonus in March and a pay upgrade in July due to recent high rating and possible band leap. Yeah, IBM has oddball times to do things... been slowly bleeding my checking account!
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- Tyek
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Re: Lower Social Security Taxes
We went into heavy debt getting my wife through school and supporting my parents and brothers. With this years big return I hope to pay off all the credit cards and a couple small bills off. By late this year I hope to clear about 1500 in bills, this is based on a plan I have to pay one off, roll that into the payment on another, pay that bill in a couple months then pay another with those combined bills. I also need to buy my parents a refridgerator, but I am hoping to be mostly bill free by the end of next year so I am ready for my kid to start college and start the process over again, hehe.Canelek wrote:Grats!
I'll feel a lot better in June when I have my heat pump/AC paid off. That has been essentially an extra car payment per month. Adjusting to home ownership expensive has been a series of financial lessons as well.
In retrospect, I am very, very glad I have not started on basement renovation due to scary contractor estimates!
Hoping that there is a work bonus in March and a pay upgrade in July due to recent high rating and possible band leap. Yeah, IBM has oddball times to do things... been slowly bleeding my checking account!
When I was younger, I used to think that the world was doing it to me and that the world owes me some thing…When you're a teeny bopper, that's what you think. I'm 40 now, I don't think that anymore, because I found out it doesn't f--king work. One has to go through that. For the people who even bother to go through that, most assholes just accept what it is anyway and get on with it." - John Lennon
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Re: Lower Social Security Taxes
Just got my 4th qtr bonus statement. I can't wait to see the damages from taxes. Check is coming the 15th.
When I was younger, I used to think that the world was doing it to me and that the world owes me some thing…When you're a teeny bopper, that's what you think. I'm 40 now, I don't think that anymore, because I found out it doesn't f--king work. One has to go through that. For the people who even bother to go through that, most assholes just accept what it is anyway and get on with it." - John Lennon
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Re: Lower Social Security Taxes
They tagged me on the check, but thanks to my 65,000 dollar solar panel roof installation I am getting 23K back in taxes this year!
When I was younger, I used to think that the world was doing it to me and that the world owes me some thing…When you're a teeny bopper, that's what you think. I'm 40 now, I don't think that anymore, because I found out it doesn't f--king work. One has to go through that. For the people who even bother to go through that, most assholes just accept what it is anyway and get on with it." - John Lennon
Re: Lower Social Security Taxes
Don't forget to thank Obama with your vote!
Have You Hugged An Iksar Today?
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- Tyek
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Re: Lower Social Security Taxes
I actually need to thank you guys for helping to pay for my solar projectAslanna wrote:Don't forget to thank Obama with your vote!
When I was younger, I used to think that the world was doing it to me and that the world owes me some thing…When you're a teeny bopper, that's what you think. I'm 40 now, I don't think that anymore, because I found out it doesn't f--king work. One has to go through that. For the people who even bother to go through that, most assholes just accept what it is anyway and get on with it." - John Lennon