Expert: Shirley McAllister, CPP, PHR - 2/9/2012

Question
I was making $15/hr temping for an office in Austin, TX. At 40 hrs a week and after taxes my $600 turned into $511 take home. I have 2 allowances and was paid weekly ( no state taxes).

The company hired me but cut my pay to $13.50/hr and will pay me bi-weekly. I figured the difference, pre-tax, to be $240 a month. And guessed after taxes to come out to $200 at least.

However, when I ran the ADP payroll calculator, I found that my take home amount to be $496 a week ($992 for 2 weeks) , only a $17 a week difference.

It seems when I was paid weekly the amount taken out of my paycheck was larger than when I am paid bi-weekly.

Have I done some bad math? I am confused that I seem to be taking home almost the same amount of money. I figured the discrepancy to be much larger.

Answer
One thing that is going on right now which does make a difference is the fact that the president passed a payday holiday bill which cut the Social Security amount withheld from 6.2% to 4.2% through the month of February.

You didn't say single or married but at the 600.00(511) rate I figured it out as single and two so these amounts are figured on the single and 2 tax tables for 2011.

Now at 15.00 an hour times 40 hours you would make 600.00
Taxes would be 40.5 fica/medicare and 48.5 for federal taxes. 600-89.00 = 511.00

Now at 13.50 an hour times 80 hours you would earn 1080 biweekly.  600X 2 is 1200 - 1080 is only 120 dollars difference in gross pay.

However the 1080 figured at the old Fica rate is
72.90 fica/medicare but at the payroll holiday rate it is only 45.36

So the taxes at the payroll holiday rate would be
45.36 fica + 15.66 medicare or 61.02 fica/medicare
The federal tax would be 92.00 So total taxes would be 153.02
1080 minus 153.02 is 926.98 for two weeks.

Now if the payday holiday is not renewed the amount will be
72.90 +92.00 or 164.90taxes so 1080 minus 150.90 is 915.10 for two weeks. If the payroll tax holiday is not extended this will start in March.

Shirley