2010 Tax Increase

[Biff]

First time for me starting a topic ...

Has anyone seen an increase in Federal tax withholding? Everyone I have talked to has. Does anyone have a source for this?

[Rob Iola]

Are you referring to withholding regulations or actual tax rates? And are you including tightened limits/thresholds on deductions/exemptions?

[Biff]

Not sure. Not a tax wiz. Just looked at my pay stub and noticed Uncle Sam is withholding more than last year and the increase is about 2% higher. This seems to have hit most friends and family ranging Salries from $15K to $130K.

[dgreco]

here are the 2010 withholding tables

http://www.irs.gov/pub/irs-pdf/n1036.pdf?portlet=7

[Rob Iola]

And you can always adjust your withholding - just contact your payroll or HR dept - just be careful that you're complying with any new regs, especially if you adjust your withholding to below the amount you had withheld in 2009 (if you get a refund you'll be fine though).

In general, I try to avoid being a member of the IRS Christmas fund...

[Col Hogan]

Yep...saw it on my check...

[dgreco]

And you can always adjust your withholding - just contact your payroll or HR dept - just be careful that you're complying with any new regs, especially if you adjust your withholding to below the amount you had withheld in 2009 (if you get a refund you'll be fine though).

In general, I try to avoid being a member of the IRS Christmas fund...

Be careful because 2009 was also lowered to 90% of the previous year and they had the making work pay credit to offset income from withholding also.


I am not 100% positive but I believe small businesses (under 50? - one client has only 28 employees and the weekly withholding dropped from about 15.80 down to 13.56 --not exact numbers) still have lower withholding for employees and I think it is almost 15% lower. The OASDI and MED have stayed the same probably because employers match.

[Biff]

And you can always adjust your withholding - just contact your payroll or HR dept - just be careful that you're complying with any new regs, especially if you adjust your withholding to below the amount you had withheld in 2009 (if you get a refund you'll be fine though).

In general, I try to avoid being a member of the IRS Christmas fund...

It's not an issue of the amount or that I want the rate less, it is more a matter of why my taxes are increasing.

I like the IRS Christmas fund personally, but I realize I am essentially giving the US a loan. However, I'd rather get a check than pay, so let's hope my IRS Christmas fund increases too.

[Rob Iola]

Yep...saw it on my check...

They're still paying you old man? I thought you went the way of Milton in Office Space - they have you in the sub-basement behind a stack of dusty boxes, minus your shiny red stapler?

[danefan]

1. Yes, withholding tables did change slightly from the 2009 tables. There are a number of reasons, including the Making Work Pay Credit is spread over 12 months this year instead of 9. The other change include lowerintg the initial threshold weekly pay amount to begin withholding and adding more brackets to the tables (from 7 in 2009 to 9 in 2010).

2. No. You taxes are NOT INCREASING. I cannot say this loud enough. The amount that gets withheld does not determine your TAX RATE! The 2010 income tax rates are exactly the same as they were in 2009. You can withhold as much or as little as you'd like. That's why you fill out your own W4.

However, with that being said there are very clear penalty provisions for failure to withhold enough to cover tax you owe at the end of the year. The withholding tax tables that dgreco linked to above provide the easiest way to make sure you don't get hit with a penalty as they will put you in one of the withholding "Safe Harbors" barring any unusually large lump sum payment during the year.

My own personal philosophy is to never ever get a refund. I withhold the least amount possible every year to avoid getting a penalty and I pay the rest over at the end of the year. A refund is nothing more than an interest free loan to the government.

[OSBF]

It's not an issue of the amount or that I want the rate less, it is more a matter of why my taxes are increasing.

Your taxes are not increasing. When you file at the end of the year it all comes out in the wash. The actual tax rates have not changed. Our HR dept sent something out that the formula used for withholding have been tweaked or changed slightly. Amounts to about 10 bucks/month for me, no biggie, it will come back at the end of the year anyways. I have my W4 set up to withold at the single rate with 0 exemptions.

[OSBF]

My own personal philosophy is to never ever get a refund. I withhold the least amount possible every year to avoid getting a penalty and I pay the rest over at the end of the year. A refund is nothing more than an interest free loan to the government.

However, a very large tax refund is also a very effective way to hide income from bitter ex-wives with stupid attorneys that aren't smart enough to know that you're doing it.

[danefan]

My own personal philosophy is to never ever get a refund. I withhold the least amount possible every year to avoid getting a penalty and I pay the rest over at the end of the year. A refund is nothing more than an interest free loan to the government.

However, a very large tax refund is also a very effective way to hide income from bitter ex-wives with stupid attorneys that aren't smart enough to know that you're doing it.

Yes....there are definitely reasons for extra withholding.

[Col Hogan]

Yep...saw it on my check...

They're still paying you old man? I thought you went the way of Milton in Office Space - they have you in the sub-basement behind a stack of dusty boxes, minus your shiny red stapler?

I still have my red stapler...I guard it with my life.....
















And who you calling OLD???

[Biff]

It's not an issue of the amount or that I want the rate less, it is more a matter of why my taxes are increasing.

Your taxes are not increasing. When you file at the end of the year it all comes out in the wash. The actual tax rates have not changed. Our HR dept sent something out that the formula used for withholding have been tweaked or changed slightly. Amounts to about 10 bucks/month for me, no biggie, it will come back at the end of the year anyways. I have my W4 set up to withold at the single rate with 0 exemptions.

Thanks. I'm in the same boat. Just seems fishy as to while taxes wouldn't go up, but they are going to increase the withholding.

[danefan]

Your taxes are not increasing. When you file at the end of the year it all comes out in the wash. The actual tax rates have not changed. Our HR dept sent something out that the formula used for withholding have been tweaked or changed slightly. Amounts to about 10 bucks/month for me, no biggie, it will come back at the end of the year anyways. I have my W4 set up to withold at the single rate with 0 exemptions.

Thanks. I'm in the same boat. Just seems fishy as to while taxes wouldn't go up, but they are going to increase the withholding.

I don't necesarily think its fishy.
Its just a tactic (underhanded to some extent) to get an additional tax-free loan from the US taxpayers.

[OSBF]

Thanks. I'm in the same boat. Just seems fishy as to while taxes wouldn't go up, but they are going to increase the withholding.

I don't necesarily think its fishy.
Its just a tactic (underhanded to some extent) to get an additional tax-free loan from the US taxpayers.

...............and to allow me to hide more income from a vengeful ex-wife.............

[danefan]

I don't necesarily think its fishy.
Its just a tactic (underhanded to some extent) to get an additional tax-free loan from the US taxpayers.

...............and to allow me to hide more income from a vengeful ex-wife.............

I did read that in Congressional Record of the floor debate.

[Biff]

Thanks. I'm in the same boat. Just seems fishy as to while taxes wouldn't go up, but they are going to increase the withholding.

I don't necesarily think its fishy.
Its just a tactic (underhanded to some extent) to get an additional tax-free loan from the US taxpayers.

I assumed as much.

[OSBF]

Actually I think this is just a small correction to the with holding formula. I went back and looked at my earnings and leave statements, the last "formula change" was in March of 2009, and the result was that they with held $20 less out of each check, and now with this change they took $5 of that back. So, the net change from the March 2009 change is still $15 less coming out than before.