Accounting, Payroll & Pension Issues/Proper payroll withholdings
QUESTION: I am a coach who will receive 2 payroll checks. the school wants to withhold money as if I am getting paid every pay period throughout the year. In other words, I would have withholding's based on ten times my actual income, is this correct ?
ANSWER: All federal withholding is based on the calculated annual income. You didn't say how often staff usually get paid, but I'll assume that normally they get paid twice a month or 24 times a year.
If your 2 payroll checks were $2,000 each, they would withhold as if you were making $48,000 a year ($2,000 x 24) even though you're not. This is just the way that the federal tax tables are designed. If you want to really dig deeper into the issue, check out the 2013 Federal Tax Withholding Tables - http://www.irs.gov/pub/irs-pdf/p15.pdf
. This will show you exactly how much they should be withholding.
You're going to have more withheld right now than you actually need, but you should get it back when you file your income tax return.
Please let me know if you have any more questions.
---------- FOLLOW-UP ----------
QUESTION: Your example is very accurate, are you saying that I must accept withholding's based on $48,000. annual income, when in fact the annual income is $ 4,000 ?
They are going to go based on what the IRS is telling them to withhold. However, one way you could withhold less from your check would be to fill out a new W-4 (http://www.irs.gov/pub/irs-pdf/fw4.pdf
) & increase the number of allowances on line 5. You can use the link I gave you with the withholding tables to see the difference in tax withheld for number of allowances. The higher # of allowances in line 5, the less income tax that is withheld.
Most people will put a 0 in line 5, which withholds the maximum amount of tax for their income. But in your case you could increase this since they'll be taking too much out of your check anyways.