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Posted: 2/9/2006 12:39:43 PM EDT
Always wondered
Link Posted: 2/9/2006 12:40:06 PM EDT
Because they take more than they should and hope you don't ask for it back.
Link Posted: 2/9/2006 12:40:43 PM EDT
People want to give the gov an interest free loan is why.
Link Posted: 2/9/2006 12:41:42 PM EDT
And because you filled out your W-4 incorrectly.

I know people who take no exemptions just to get a big check in May.
Link Posted: 2/9/2006 12:45:04 PM EDT
I always owe
Link Posted: 2/9/2006 12:46:44 PM EDT
Link Posted: 2/9/2006 1:15:04 PM EDT
Thanks
Link Posted: 2/9/2006 1:21:08 PM EDT

Originally Posted By MrClean4Hire:
People want to give the gov an interest free loan is why.



Yep!


There is a calculator somewhere on the web that can show you how to properly set the number of exemptions (or whatever they're called) based on your expected deductions and taxes. So if you just bought a home (and financed part of the purchase), then you should submit a new W4 so you get more of YOUR money when you get your paycheck, instead of floating Uncle Sam a loan until April of each year.
Link Posted: 2/9/2006 1:22:09 PM EDT
[Last Edit: 2/9/2006 1:23:09 PM EDT by LARRYG]

Originally Posted By lordtrader:

Originally Posted By MrClean4Hire:
People want to give the gov an interest free loan is why.




Originally Posted By Mauser101:
And because you filled out your W-4 incorrectly.





There's your answer.



Not necessarily.

We get lots of overtime, bonus, and other incentives. The OT hours for a given pay period might put you in a higher withholding bracket for that pay period. I once figured it was not worth more than about 9 or 10 hours a week for after that, you actually take home less by getting into a higher bracket.

We just got several thousand dollars on a psuedo-stock option (our company doesn't have stock, it's a wierd story). After they lumped it in with our paycheck, the withholding was stupendous. It will all level out and at the end of the year, I get back the part that was withheld due to the larger paychecks.
Link Posted: 2/9/2006 1:25:50 PM EDT

Originally Posted By LARRYG:

Originally Posted By lordtrader:

Originally Posted By MrClean4Hire:
People want to give the gov an interest free loan is why.




Originally Posted By Mauser101:
And because you filled out your W-4 incorrectly.





There's your answer.



Not necessarily.

We get lots of overtime, bonus, and other incentives. The OT hours for a given pay period might put you in a higher withholding bracket for that pay period. I once figured it was not worth more than about 9 or 10 hours a week for after that, you actually take home less by getting into a higher bracket.

We just got several thousand dollars on a psuedo-stock option (our company doesn't have stock, it's a wierd story). After they lumped it in with our paycheck, the withholding was stupendous. It will all level out and at the end of the year, I get back the part that was withheld due to the larger paychecks.



The highlighted part has me confused. You pay a higher percentage of the overtime income for taxes, but you still get paid time and a half. So everyone should make minimum wage so they don't have to pay more taxes? Doesn't make sense.
Link Posted: 2/9/2006 1:27:29 PM EDT
Link Posted: 2/9/2006 1:29:03 PM EDT

Originally Posted By DigDug:

Originally Posted By LARRYG:

Originally Posted By lordtrader:

Originally Posted By MrClean4Hire:
People want to give the gov an interest free loan is why.




Originally Posted By Mauser101:
And because you filled out your W-4 incorrectly.





There's your answer.



Not necessarily.

We get lots of overtime, bonus, and other incentives. The OT hours for a given pay period might put you in a higher withholding bracket for that pay period. I once figured it was not worth more than about 9 or 10 hours a week for after that, you actually take home less by getting into a higher bracket.

We just got several thousand dollars on a psuedo-stock option (our company doesn't have stock, it's a wierd story). After they lumped it in with our paycheck, the withholding was stupendous. It will all level out and at the end of the year, I get back the part that was withheld due to the larger paychecks.



The highlighted part has me confused. You pay a higher percentage of the overtime income for taxes, but you still get paid time and a half. So everyone should make minimum wage so they don't have to pay more taxes? Doesn't make sense.



Huh?
Link Posted: 2/9/2006 1:29:49 PM EDT
[Last Edit: 2/9/2006 1:32:29 PM EDT by Troy]
Link Posted: 2/9/2006 1:30:12 PM EDT

Originally Posted By lordtrader:

Originally Posted By LARRYG:

Originally Posted By lordtrader:

Originally Posted By MrClean4Hire:
People want to give the gov an interest free loan is why.




Originally Posted By Mauser101:
And because you filled out your W-4 incorrectly.





There's your answer.



Not necessarily.

We get lots of overtime, bonus, and other incentives. The OT hours for a given pay period might put you in a higher withholding bracket for that pay period. I once figured it was not worth more than about 9 or 10 hours a week for after that, you actually take home less by getting into a higher bracket.

We just got several thousand dollars on a psuedo-stock option (our company doesn't have stock, it's a wierd story). After they lumped it in with our paycheck, the withholding was stupendous. It will all level out and at the end of the year, I get back the part that was withheld due to the larger paychecks.



That's why you claim the highest possible deduction on you W-4. If you get bonuses and such, you will just end up paying at tax time. Every permanent job I've had I was always salary plus bonus/commission. Bonuses are typically 2X my salary. I claim the highest possible deduction. Come tax time I end up paying. No interest free loan to Uncle Sam

Although I am getting money back this year for being a Hurricane victim. At least for sure on LA state income tax I paid.



I don't care about the interest free loan. I would rather get a little back than have to pay more.
Link Posted: 2/9/2006 1:31:38 PM EDT

Originally Posted By LARRYG:

Originally Posted By DigDug:

Originally Posted By LARRYG:

Originally Posted By lordtrader:

Originally Posted By MrClean4Hire:
People want to give the gov an interest free loan is why.




Originally Posted By Mauser101:
And because you filled out your W-4 incorrectly.





There's your answer.



Not necessarily.

We get lots of overtime, bonus, and other incentives. The OT hours for a given pay period might put you in a higher withholding bracket for that pay period. I once figured it was not worth more than about 9 or 10 hours a week for after that, you actually take home less by getting into a higher bracket.

We just got several thousand dollars on a psuedo-stock option (our company doesn't have stock, it's a wierd story). After they lumped it in with our paycheck, the withholding was stupendous. It will all level out and at the end of the year, I get back the part that was withheld due to the larger paychecks.



The highlighted part has me confused. You pay a higher percentage of the overtime income for taxes, but you still get paid time and a half. So everyone should make minimum wage so they don't have to pay more taxes? Doesn't make sense.



Huh?



Exactly.

"I once figured it was not worth more than about 9 or 10 hours a week for after that, you actually take home less by getting into a higher bracket."
Link Posted: 2/9/2006 1:32:50 PM EDT
Gov. likes to make interest on your "donation" w/o benefit to you. If you claim it & just pay tax @ end of year, the IRS HAL megaputer puts a flag on your file. Might even get you an audit if you make enough take-home.

It's called power.
Link Posted: 2/9/2006 1:33:02 PM EDT
[Last Edit: 2/9/2006 1:34:25 PM EDT by lordtrader]
Link Posted: 2/9/2006 1:34:43 PM EDT
Everyone should have to write out a check for the full amount of their tax liability on April 15th. No more withholding.

Then we will see how long it takes before people get pissed off about taxes...
Link Posted: 2/9/2006 1:36:11 PM EDT

Originally Posted By lordtrader:

Originally Posted By MrClean4Hire:
People want to give the gov an interest free loan is why.




Originally Posted By Mauser101:
And because you filled out your W-4 incorrectly.





There's your answer.



If you get a very large tax return that is correct, you did someyhing wrong and paid too much through the year. I have never understood why people do thet. If you are honest and and do everyhting right you will be very close at the end of the year. You may owe a little or get a little back. This year I am getting $1700 Federal and $600 State approximately.
Link Posted: 2/9/2006 1:37:55 PM EDT
I will do anything to cover my ass when it comes to the IRS.

I even enclose mints when I mail my return.
Link Posted: 2/9/2006 1:39:46 PM EDT

Originally Posted By Silesius:
I will do anything to cover my ass when it comes to the IRS.

I even enclose mints when I mail my return.



Just don't send them any powdered sugar. That would be bad.
Link Posted: 2/9/2006 1:41:02 PM EDT



Not necessarily.

We get lots of overtime, bonus, and other incentives. The OT hours for a given pay period might put you in a higher withholding bracket for that pay period. I once figured it was not worth more than about 9 or 10 hours a week for after that, you actually take home less by getting into a higher bracket.

We just got several thousand dollars on a psuedo-stock option (our company doesn't have stock, it's a wierd story). After they lumped it in with our paycheck, the withholding was stupendous. It will all level out and at the end of the year, I get back the part that was withheld due to the larger paychecks.
--------------------------------------------------------------------------------




The highlighted part has me confused. You pay a higher percentage of the overtime income for taxes, but you still get paid time and a half. So everyone should make minimum wage so they don't have to pay more taxes? Doesn't make sense.


He's saying that if he works more than 9-10 hours of overtime, the increased income means he gets bumped up to a higher income tax bracket which means effectively he actually takes home less money than he would without the overtime.....
Link Posted: 2/9/2006 1:46:31 PM EDT

Originally Posted By HeVGunner:


Not necessarily.

We get lots of overtime, bonus, and other incentives. The OT hours for a given pay period might put you in a higher withholding bracket for that pay period. I once figured it was not worth more than about 9 or 10 hours a week for after that, you actually take home less by getting into a higher bracket.

We just got several thousand dollars on a psuedo-stock option (our company doesn't have stock, it's a wierd story). After they lumped it in with our paycheck, the withholding was stupendous. It will all level out and at the end of the year, I get back the part that was withheld due to the larger paychecks.
--------------------------------------------------------------------------------




The highlighted part has me confused. You pay a higher percentage of the overtime income for taxes, but you still get paid time and a half. So everyone should make minimum wage so they don't have to pay more taxes? Doesn't make sense.


He's saying that if he works more than 9-10 hours of overtime, the increased income means he gets bumped up to a higher income tax bracket which means effectively he actually takes home less money than he would without the overtime.....



I know exactly what he is saying.

It's not true, but I know what he is saying.

When you get bumped up to a higher tax bracket, the first X amount of income is taxed at the lowest rate, the next Y amount above X is taxed at the next higher and so forth. The entire amount is not taxed at the higher rate. That would be a flat tax, and we don't have one.
Link Posted: 2/9/2006 1:53:26 PM EDT

Originally Posted By DigDug:
Everyone should have to write out a check for the full amount of their tax liability on April 15th. No more withholding.

Then we will see how long it takes before people get pissed off about taxes...



My thoughts exactly!
Link Posted: 2/9/2006 2:15:21 PM EDT

Originally Posted By DigDug:

I know exactly what he is saying.

It's not true, but I know what he is saying.

When you get bumped up to a higher tax bracket, the first X amount of income is taxed at the lowest rate, the next Y amount above X is taxed at the next higher and so forth. The entire amount is not taxed at the higher rate. That would be a flat tax, and we don't have one.



It always amazes me that people pay thousands of dollars in income taxes and don't have an understanding of how the tax system works. Maybe schools should spend time teaching this in math or economics classes.
Link Posted: 2/9/2006 2:19:54 PM EDT

Originally Posted By DigDug:

Originally Posted By LARRYG:

Originally Posted By lordtrader:

Originally Posted By MrClean4Hire:
People want to give the gov an interest free loan is why.




Originally Posted By Mauser101:
And because you filled out your W-4 incorrectly.





There's your answer.



Not necessarily.

We get lots of overtime, bonus, and other incentives. The OT hours for a given pay period might put you in a higher withholding bracket for that pay period. I once figured it was not worth more than about 9 or 10 hours a week for after that, you actually take home less by getting into a higher bracket.

We just got several thousand dollars on a psuedo-stock option (our company doesn't have stock, it's a wierd story). After they lumped it in with our paycheck, the withholding was stupendous. It will all level out and at the end of the year, I get back the part that was withheld due to the larger paychecks.



The highlighted part has me confused. You pay a higher percentage of the overtime income for taxes, but you still get paid time and a half. So everyone should make minimum wage so they don't have to pay more taxes? Doesn't make sense.



We have an incremental tax system, so his logic makes no sense.
Link Posted: 2/9/2006 2:21:58 PM EDT

Originally Posted By MrClean4Hire:

Originally Posted By DigDug:

Originally Posted By LARRYG:

Originally Posted By lordtrader:

Originally Posted By MrClean4Hire:
People want to give the gov an interest free loan is why.




Originally Posted By Mauser101:
And because you filled out your W-4 incorrectly.





There's your answer.



Not necessarily.

We get lots of overtime, bonus, and other incentives. The OT hours for a given pay period might put you in a higher withholding bracket for that pay period. I once figured it was not worth more than about 9 or 10 hours a week for after that, you actually take home less by getting into a higher bracket.

We just got several thousand dollars on a psuedo-stock option (our company doesn't have stock, it's a wierd story). After they lumped it in with our paycheck, the withholding was stupendous. It will all level out and at the end of the year, I get back the part that was withheld due to the larger paychecks.



The highlighted part has me confused. You pay a higher percentage of the overtime income for taxes, but you still get paid time and a half. So everyone should make minimum wage so they don't have to pay more taxes? Doesn't make sense.



We have an incremental tax system, so his logic makes no sense.




+1 The concept of marginal taxation is missing from his logic.
Link Posted: 2/9/2006 2:41:32 PM EDT

Originally Posted By lordtrader:
You pay the same amount that you would throughout the year. You just feel it more cause its coming out in one lump sum. If you are paying every paycheck its just a trickle effect. Either way uncle sam gets his money.

I would just rather he wait a year.



The gov. takes in excess of what you owe & collects interest on it over the tax year, otherwise no one would receive a return check from the IRS for the amount they overpaid. It would be nice, simple, & efficient if a flat % tax were taken per paycheck w/ no annual bullsh!t to contend with, as the Danes do it. Special interest (read: IRS emlpoyee job security) precludes such common sense.
Link Posted: 2/9/2006 3:48:51 PM EDT
The Federal Form W-4 has a worksheet on it that helps you estimate the number of exemptions you should claim for Federal income tax withholding on the W-4 you give to your employer. The smaller the number you indicate, the greater the amount of federal income tax withheld on each paycheck.

www.irs.gov

go to "Forms and Publications" link, scroll down to 2006 Form W-4.

Available in Adobe PDF format and can be downloaded and printed out. Fill it out using the numbers from your 2005 Federal 1040. Adjust them for known changes for 2006. For example, if you and spouse are expecting your first child in 2006, indicate 3 personal exemptions rather than the 2 you claimed on your 2005 return.


States with graduated rate income taxes, like the Federal, have similar forms.

Go to your state home page and then to its tax department.


We already work until some time in May every year to pay our annual tax burdens to national, state and local taxing authorities. There's no point in lending them any significant additional money, interest-free, for an entire 12 months.

Link Posted: 2/9/2006 3:50:46 PM EDT

Originally Posted By DigDug:
Everyone should have to write out a check for the full amount of their tax liability on April 15th. No more withholding.

Then we will see how long it takes before people get pissed off about taxes...



+1000
Link Posted: 2/9/2006 3:53:24 PM EDT

Originally Posted By DVCAPI:

Originally Posted By DigDug:
Everyone should have to write out a check for the full amount of their tax liability on April 15th. No more withholding.

Then we will see how long it takes before people get pissed off about taxes...



+1000



Even better, change " tax day" to the second monday in November.
Link Posted: 2/9/2006 4:32:46 PM EDT
The problem is that if I follow the directions on the W-4 and answer all questions honestly, and use their stupid formula I end up paying big bucks every April 15th because NOT ENOUGH is being taken out.

Why?

Link Posted: 2/9/2006 4:45:32 PM EDT
One way or another, I'd have to set money aside during the year. Either in a bank account, or by allowing uncle sam to take too much.

In principle, I see the point of not paying anything, investing the money, and making some of it back. In reality, I prefer to not have to worry about it. My check for 2 dollars will be off to the state tomorrow, and my refund from .gov should be along shortly, and I don't sweat any of it.
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