Tax Blog
It is a salary position that pays weekly. My tax is about 22% of my pay check!! Is that right? How does this tax thing work? Are their returns or do they just take it out of my check?
And advice would help! Thank you!
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Tax Questions & Answers
The more taxes you have taken out during the year, the bigger of a return you will get at the end of the year.
The amount of money you should have taken out directly correlates to how much money you make. If you make more than 40k or so per year, I would take out a little more, but if not, don’t worry about it. Leave it alone.
Employer will deduct the social security and medicare taxes of 7.65%. This amount is fixed irrespective of what you put on W4.
About Federal withholding, for 2007 the Standard deduction is $5,350 and exemption deduction is $3,400. Thus for a Single who is not dependent of anyone else, if the total income for 2007 is up to $8,750 ($5,350 + $3,400), then there will not be any Federal tax. This amounts to a salary of up to $168 per week.
Now if your income is more than $8,750 by up to $7,825, the Fed tax slab is 10%. Suppose the paycheck is $300 per week, then the yearly income is $15,600 ($300 x 52). Tax on $6,750 ($15,600 minus $8,750) is $675. That is the deduction per week should be around $13 ($675 / 52).
The next slab of Federal income tax (for Single status) income from $7,850 to $31,850 is 15%.
Thus first of all figure out what your yearly income will be. Then what will be your taxable income (income minus your deduction). Then what will be the Federal tax on your total income. Then divide the Federal tax amount by the number of pay periods in a year to figure out the approximate amount of Federal withholding per pay period.
You can always submit a new W4 to make sure that the Federal withholding is proper. If withholdings are more than what they should be, you will get a refund check after you file your return.
http://www.paycheckcity.com is a paycheck calculator website that you can use to check and see if what is being taken out is the proper amount. But just to let you know, Social Security and Medicare tax are 7.65% of your paycheck, so that leaves about 14-15% for federal and state withholding taxes. Which might be low depending on how much you make. Federal and state withholding would be based on your gross paycheck, and what you claimed on your W-4 for exemptions and filing status.