chicagotribune.com
More in your paycheck? New withholding rules could cost you
April 17, 2009
Did you notice a little bump in your paycheck?
Those in a double-income household had better watch their paycheck closely. This boost may cost you next April 15.
Here's why: Employers started using a new withholding tax table, effective April 1. In one of many recent tax law changes, Congress decided to give wage earners a payroll-tax cut of up to $400 per person. The plan was to get this money into workers' hands quickly and out into the economy. Rather than wage earners waiting until next year to file their taxes and get the benefit of this tax cut, the goal was to take less out of paychecks starting now. But the new withholding tables in some cases cut too much. If that happens, you'll have to pay it back next year.
The tax and accounting business of Thomson Reuters looked at the new tables and found that for a husband and wife who each earn $75,000, the new tables might mean a cut of $1,228 cut in payroll taxes. But their maximum new tax credit is only $800. So next year, they'd have to pay the extra $428 back.
What to do?
To double-check the right amount of tax withheld, look at IRS Publication 919, said CCH, a provider of tax, accounting and audit information.
More in your paycheck? New withholding rules could cost you
April 17, 2009
Did you notice a little bump in your paycheck?
Those in a double-income household had better watch their paycheck closely. This boost may cost you next April 15.
Here's why: Employers started using a new withholding tax table, effective April 1. In one of many recent tax law changes, Congress decided to give wage earners a payroll-tax cut of up to $400 per person. The plan was to get this money into workers' hands quickly and out into the economy. Rather than wage earners waiting until next year to file their taxes and get the benefit of this tax cut, the goal was to take less out of paychecks starting now. But the new withholding tables in some cases cut too much. If that happens, you'll have to pay it back next year.
The tax and accounting business of Thomson Reuters looked at the new tables and found that for a husband and wife who each earn $75,000, the new tables might mean a cut of $1,228 cut in payroll taxes. But their maximum new tax credit is only $800. So next year, they'd have to pay the extra $428 back.
What to do?
To double-check the right amount of tax withheld, look at IRS Publication 919, said CCH, a provider of tax, accounting and audit information.
--- In vantage@yahoogroups.com, "rapat_mark" <mtellefson@...> wrote:
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> I have employees questioning whether the changes to the 2009 federal withholding tables will cause them to owe more at tax time next year. One employee's spouse received an email from their payroll department warning employees that they may want to review their withholding and change their W4.
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> Have any of you seen information on this and if so are you warning your employees?
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> This is especially critical for us since in 2008 a glitch in Vantage caused 12 employees (including me) to have too little withheld.
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> Mark
>