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Financial Planning / Tax Strategies
|Subject: Re: Federal tax withholding rates||Date: 1/19/2013 11:49 AM|
|Author: TMFPMarti||Number: 117414 of 119632|
Thanks for the link. Those rates reflect the changes in the law made at the last minute, so that's not the problem.
It appears my federal tax witholding came based on my gross pay.
Now, out of my gross pay, state, federal, FICA, Medicare, deferred comp, retirement deduction and flex spending deduction are all taken out.
Shouldn't my tax withholding rate be calculated on my net pay after most or all of these deductions?
FICA and Medicare are based on gross minus flex spending.
Income tax is based on gross minus withholding allowances, flex spending and deferred comp.
It's doubtful, but not unheard of, that your retirement contribution would reduce your base for income tax withholding. Check with your payroll people if you're not sure.
There's a chart in Pub 15 showing how various paycheck items affect the withholding base.
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