Expert: Shirley McAllister, CPP, PHR - 8/24/2010

Question
Hi SHIRLEY

I was owed backpay for past 3 yrs, now they are giving me a check , but broken into smaller pieces at lower tax rate
which makes some sense

The problem is the other deductions , FICA, BlueCross/BS
Long term care benefits, dental which like insurance have
already been deducted from those years I was not getting my payincrease

what is legal amount for backpay tax rate and deductions

thanks

JAMES


Answer
It will not make a difference the Fica, medicare,federal and state taxes come from all wages so they will come from the back wages as well.

The insurance permiums have been paid so should not come from the back wages. You still will pay the insurance premiums but they will come from your current wages.

If they pay a separate check for the back pay than only taxes such as Fica, Medicare, Federal and State tax come out. If it is a separate check they will probably use the supplemental tables which uses the supplemental tax rates. The federal supplemental rate is 25% I don't know what your state is. The fica and medicare rate is always 7.65% of all wages.

If they add it to your regular check than the taxes plus the benefits will come out because the insurance is still paid and is coming out of your regular wages.

Shirley