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| *The Commerce Journal>>>Other Taxes |
Any one have any problems filing for tax exemption on payroll? |
I recently took a sales position and was not told about the 45% tax on my commission. This puts me in a bind. My payroll department said I can go tax exempt for a few weeks and then change it back. Has anyone had any problems doing this? I figure I would just adjust it on my taxes at the end fo the year. 45% tax on your commission? I'm assuming that that 45% covers federal, social security, medicare, and state withholding. Payroll can't not withhold social security and medicare taxes which together is 7.65% of your pay. No can go exempt for a couple of weeks, and then go back (but remember, they can't exempt social security and medicare), as long as they are willing to do it for you it should be no problem. The one thing you want to avoid is underpayment penalties. Federal underpayment penalty kicks in if you owe $1,000 or more in tax at year end. State I can't tell you, since I don't know what state you are in. From what I have seen..... People who try to play games with their W4 usually end up owing at the end of the year. If you are having 45% withheld from your pay you must be in a really high paid job. Withholding rates attempt to calculate your annual income based on a given pay period and withhold what would be needed to cover that income. Normally it is a number slightly below your marginal tax rate. I am guessing that you would need an annual salary of over $150,000 to reach 45% including FICA and State withholding. Regardless you can not go exempt. |
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