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Financial Planning / Tax Strategies
|Subject: Re: Federal tax withholding rates||Date: 1/19/2013 11:55 AM|
|Author: wrjohnston91283||Number: 117415 of 122648|
Now, out of my gross pay, state, federal, FICA, Medicare, deferred comp, retirement deduction and flex spending deduction are all taken out.
My net pay is roughly $600 less than my gross pay.
Shouldn't my tax withholding rate be calculated on my net pay after most or all of these deductions?
Some, but not all of those items are deductions against which taxes are calculated.
You have gross, which is your starting point, and net, which is your take home. Between that, you have several different taxable amounts, which may or may not be shown on your pay stub.
Your 401k (I'm assuming that's what you mean by retirement deduction) isn't deductible for FICA/Medicare purposes, but is for income tax. Alternatively, your FICA and Medicare deductions are not deductible for income tax purposes.
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