Working P/T -Taxes have gone up

[shotgunner]

I got my first paycheck of the new year and was surprised to see my net pay slightly decreased. I thought with the temporary 2% cut to Social Security tax I would see an increase. Seems the sunsetting of the Make Work Pay tax credit as of 12/31/10 more than nullifies the 2% SS rollback for those making less than $30K annually. It doesn't seem to me that any policitian or pundit saw that coming. That is a pretty big boo boo since the rollback to SS was to put more dollars in the economy for consumption.

 

[MasterBlaster]

They have implemented the new and improved "Make Work Pay" program. The goal is that if you work then you'll pay more.

- Now get with the program

 

[ziggy29]

Yeah, I've seen this noted elsewhere. At some point the loss of that credit more than offsets the reduction in FICA taxes. The irony is that part of the reason for targeting the SS tax for "relief" this year is because it stops being a tax break at around $106K of earned income, so it mostly benefits the middle class... but it does have the effect of raising the overall taxes for those who have earned income, but below about $20K (don't remember the exact number) -- those who may need the tax relief most of all.

 

[shotgunner]

Ziggy, I am working P/T, 20 hrs a week. My hourly rate comes to just over $30k a year. I am not sure how the payroll office calculates the taxes, I don't think they annualize the hourly rate based on a 40 hour week or not. If not then at $30K my pay went down about $5 a week. To me this mean a big group of people will have the expected extra dollars from teh SS 2% rollback to consume and help the economy. Another gov't plan gone awry, imagine that

 

[LOL!]

Some payroll software has not implemented the 2% reduction yet, so check that.

It is well-known that some folks will pay more because the 2% FICA reduction is not enough to offset the MakeWorkPay credit.

 

[Andre1969]

Okay, so that's what probably happened to me. I got my second paycheck of the year today, and it was $14 less than what the first paycheck was. And that entire $14 was because of an increase in federal taxes.

The first paycheck, while received in 2011, was actually for the last two weeks of 2010. So I guess that would make sense...the reduction in SS took effect with that paycheck, but maybe the "Making Work Pay" hadn't expired yet, but finally did with the second paycheck?

 

[shotgunner]

Some payroll software has not implemented the 2% reduction yet, so check that.

It is well-known that some folks will pay more because the 2% FICA reduction is not enough to offset the MakeWorkPay credit.

I'm pretty clever . I checked the details of a previous pay stub for same amount of hours worked prior to 12/31. The increase in federal income tax withholding increased slightly more than the 2% decrease in SS tax refelcted in my pay stubs.

I guess I need to read more, I did not think this was all that well known.

 

[M Paquette]

I'm pretty clever . I checked the details of a previous pay stub for same amount of hours worked prior to 12/31. The increase in federal income tax withholding increased slightly more than the 2% decrease in SS tax refelcted in my pay stubs.

I guess I need to read more, I did not think this was all that well known.

The old Making Work Pay tax credit ($400, or $800 for married filing joint) is gone, replaced with a payroll tax cut that doesn't get to $400 until income crosses about $20,000/year.

The net effect is that for most folks earning $35,000 or less (and mostly joint filers) is that your taxes go up slightly for 2011. Don't worry, though. Take comfort in the fact that high wage earners will do at least as well as they did last year.