whoisjohngalt
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Post by whoisjohngalt on Jan 21, 2011 12:21:42 GMT -5
My mom, who makes very little money, told me today that her federal tax in her paycheck went through the roof, compared to her last paycheck. Her boss told her that federal tax rate has changed for low income people?
The ignorant me hasn't heard anything about it.
I know some of you do payroll, can you enlighten me?
I don't work and my DH's paychecks remained the same.
thanks
Lena
P.S. - No, nothing else changed in her paycheck (well, except SS tax, but she is aware of that)
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Post by Savoir Faire-Demogague in NJ on Jan 21, 2011 12:24:30 GMT -5
I've heard(from posters here) that the "Making Work Pay" reduction has expired...
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Deleted
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Post by Deleted on Jan 21, 2011 12:25:30 GMT -5
SF has it right.
The credit expired, but should be more than offset by the reduction of SS tax (although maybe not for low income folks, I am not sure)
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Deleted
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Post by Deleted on Jan 21, 2011 12:26:34 GMT -5
Did she used to get an Advanced Earned income tax credit? Because as of Dec 2010, there is no more advance EITC... if this is the issue, she probably would still get it at the end of the year... ??
Making work pay wasn't much was it? 30$ a pay? And isn't the new 'break' in fica supposed to offset it?
I think you'd need more information to know for sure what was triggering this... i'd want a full report from the HR department...
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whoisjohngalt
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Post by whoisjohngalt on Jan 21, 2011 12:35:54 GMT -5
Oh, Making work pay credit makes perfect sense. No, she wouldn't get EIC bc my Dad makes way too much money, so when they file their tax bracket is way up there.
I completely forgot about that one.
Thanks
Lena
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jeffreymo
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Post by jeffreymo on Jan 21, 2011 12:39:25 GMT -5
Making work pay expired - Generally this will have an impact of $7-8 per week
This change affected every working person in the US except for maybe those commission-only people (if those even exist).
Is it offset by the FICA reduction? Well, the FICA change is a 2% reduction, so that means that someone has to make between $350 and $400/wk to cover the 7 or 8 bucks.
Most folks only notice when taxes go up, which is why this may be alarming for most folks (even though their net pay is unaffected or in alot of cases net positive).
edited: Looks like the MWP elimination was more like $11/wk so wages of 550 to break even.
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Post by Savoir Faire-Demogague in NJ on Jan 21, 2011 12:50:39 GMT -5
This change affected every working person in the US except for maybe those commission-only people (if those even exist).
Actually not quite accurate. Congress does not think that what I do for work is worth making it pay.
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souldoubt
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Post by souldoubt on Jan 21, 2011 12:53:07 GMT -5
What SF said. The MWP did not affect people making a certain amount. On either here or the old board someone was saying their pay went down despite the SS reduction and they almost acted like they were somehow cheated. To each his own but that's at least one reason I like the SS reduction because this time I actually benefit.
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Deleted
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Post by Deleted on Jan 21, 2011 12:56:22 GMT -5
Still... 'went through the roof' to me isn't 7-11$ increase... ? ... perspective i guess...
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jeffreymo
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Post by jeffreymo on Jan 21, 2011 13:02:03 GMT -5
This change affected every working person in the US except for maybe those commission-only people (if those even exist).Actually not quite accurate. Congress does not think that what I do for work is worth making it pay. Oh my bad. I was actually speaking only in terms of the change in withholdings (every worker saw a change) - not necessarily to what people need to calculate when they file their 1040's. |
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souldoubt
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Post by souldoubt on Jan 21, 2011 13:20:00 GMT -5
I believe the OP was talking about her mom's paycheck which I assume was received in 2011 and not her 2010 tax return. In that case MWP is no longer in effect.
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Taxman10
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Post by Taxman10 on Jan 21, 2011 13:23:43 GMT -5
Still... 'went through the roof' to me isn't 7-11$ increase... ? ... perspective i guess... I was thinking the same thing |
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Angel!
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Post by Angel! on Jan 21, 2011 13:28:59 GMT -5
Still... 'went through the roof' to me isn't 7-11$ increase... ? ... perspective i guess... Mine went up $28/paycheck. If I was in a low bracket due to low pay/dependents/deductions & having only $50 taken out/paycheck, a $28 increase would be pretty significant. |
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whoisjohngalt
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Post by whoisjohngalt on Jan 21, 2011 13:40:23 GMT -5
It went up $22 per paycheck. For someone making little money, that's quite noticeable.
Thanks everyone.
Lena
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whoisjohngalt
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Post by whoisjohngalt on Jan 21, 2011 13:41:57 GMT -5
Another thing- I tend to look at this kind of thing as % increases, not just $ increases and federal tax % increased significantly, that's why I used "went through the roof" language.
Lena
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TrixAre4Kids
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Post by TrixAre4Kids on Jan 21, 2011 14:29:20 GMT -5
Both my federal tax and SS tax went DOWN on my first paycheck of 2011. I am eagerly awaiting next weeks to see what they do with that one.
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Angel!
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Post by Angel! on Jan 21, 2011 14:54:19 GMT -5
Both my federal tax and SS tax went DOWN on my first paycheck of 2011. I am eagerly awaiting next weeks to see what they do with that one. Did your insurance premiums, HSA contributions, 401K contributions, or FSA contributions increase? That is the only reason I can think of for your federal withholding to decrease (unless you changed your exemptions). SS tax should have decreased, they changed the deduction by 2% for everyone. |
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Deleted
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Post by Deleted on Jan 21, 2011 15:09:51 GMT -5
What SF said. The MWP did not affect people making a certain amount. On either here or the old board someone was saying their pay went down despite the SS reduction and they almost acted like they were somehow cheated. To each his own but that's at least one reason I like the SS reduction because this time I actually benefit. That was probably me and it was on this new board. I didn't feel cheated, I just couldn't understand how everyone was talking about putting their extra 2% into savings when my paycheck was actually decreasing. My federal withholding went up $23 - I don't earn much so it does sting a little. An added bonus is that our big raise goes in effect next week, but since our health insurance is going up $20/pay, I''m only seeing a $2.45 increase per paycheck. But I won't complain since I know so many of you haven't seen raises in years... This is probably the last raise I'll see for 4 years since our contract is up in June and our new governor promises to be tougher on employees. |
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TrixAre4Kids
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Post by TrixAre4Kids on Jan 21, 2011 15:21:09 GMT -5
Both my federal tax and SS tax went DOWN on my first paycheck of 2011. I am eagerly awaiting next weeks to see what they do with that one. Did your insurance premiums, HSA contributions, 401K contributions, or FSA contributions increase? That is the only reason I can think of for your federal withholding to decrease (unless you changed your exemptions). SS tax should have decreased, they changed the deduction by 2% for everyone. No, nothing else changed. I have a little extra holiday pay, but my insurance premium only changed about $10. Nothing major. That is why I am curious to see my next paystub. |
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