? about the new federal tax withholdings after cuts

[wbnolefan2]

My employer has implemented the lower withholdings after the tax cuts, so here's my question :

Since my last pay period was in January and February (ended Feb 3), will I see more $$ next check since the entire pay period is under the new framework or was it fully realized last check? My payroll person seemed clueless when I asked.

 

[Fijimn]

My employer has implemented the lower withholdings after the tax cuts, so here's my question :

Since my last pay period was in January and February (ended Feb 3), will I see more $$ next check since the entire pay period is under the new framework or was it fully realized last check? My payroll person seemed clueless when I asked.

It is my understanding that the withholding tables were no out until the end of January/beginning of February -- so you probably have not realized the increase. I also read to check the government's math.

 

[wbnolefan2]

I wouldn’t turn down some more that’s for sure !

 

[Fijimn]

I wouldn’t turn down some more that’s for sure !

The issue is that there may be incentive to underestimate the withholding

 

[seminole97]

The issue is that there may be incentive to underestimate the withholding

The incentive for overestimating is that you provide the govt an interest free loan and a not insignificant portion of the public also has no clue what their actual federal tax liabilities total.

 

[wbnolefan2]

To clarify I am salaried, so I did see a bump last check - just wondering if I'll see more next time since the pay period will be completely under the new system.

 

[SeaPA]

While I haven't really looked at the new tables much, offhand my guess would be that it was fully implemented with your last paycheck. The process of calculating your paycheck works roughly like this:

Calculate your gross pay
subtract SS & Medicare taxes
subtract income tax withholding as calculated by either formula or reference to withholding chart

So they wouldn't have withheld for a week based on the old chart, and a week based on the new chart - they'd have looked at gross pay for the entire pay period & withheld based on the formula/chart that was in effect (which, on your last payday, was the new formula).

Note, that's just a guess. I advanced out of doing payroll a looooooooong time ago.

 

[wbnolefan2]

Thanks Sea, that’s kind of what I assumed

 

[LT4PLY]

The incentive for overestimating is that you provide the govt an interest free loan and a not insignificant portion of the public also has no clue what their actual federal tax liabilities total.

It's not necessarily an interest free loan. By paying a bit extra you also avoid penalties for not paying enough which has nailed me the last couple of years.

 

[seminole97]

It's not necessarily an interest free loan. By paying a bit extra you also avoid penalties for not paying enough which has nailed me the last couple of years.

So it's an interest free loan, you thread the needle, or get a penalty.

Even Satan wouldn't ask you to sign a deal like that, which must be why they don't ask...

 

[LesClaypool]

We give banks interest-free loans in our checking accounts all the time.

Enough w/the narrative that we’re giving away all this lost income by loaning it to the govt. It would’ve almost certainly gone into a non-interest -bearing checking account anyway.

Pick your poison. You’re giving someone an interest-free loan no matter how you slice it.

 

[West Duval Nole]

So it's an interest free loan, you thread the needle, or get a penalty.

Even Satan wouldn't ask you to sign a deal like that, which must be why they don't ask...

I always aim to get back $100 or less or pay $100 or less.

 

[seminole97]

We give banks interest-free loans in our checking accounts all the time.

That’s your choice, isn’t it?
I choose exactly how much to leave in a checking account, and I hold it in a checking account for the services they provide. We’re doing each other a favor, if you will, under mutually agreed upon terms.

Enough w/the narrative that we’re giving away all this lost income by loaning it to the govt. It would’ve almost certainly gone into a non-interest -bearing checking account anyway.

I suspect I see a greater value in the private allocation of capital, even when its only a little over $100 billion a year.
You know what they say, a billion here, a billion there, pretty soon you’re talking real money!

Pick your poison. You’re giving someone an interest-free loan no matter how you slice it.

Only if you have no interest in using a bank, and I’m not there yet myself.