- Oct 22, 1999
On a per paycheck basis, taxes are withheld based on Schedule 15. These calculations assume that whatever you make on any given paycheck is what you will make all year. So if you are paid every 2 weeks and get on check with a bonus on it for $10k the calculations will assume that you make $260K/yr, even if your normal check is only $4k. Of course when you do your taxes at the end of the year, you will only owe based on what you actually earned and it all works out. But this is why if you get a check with a lot of OT or a bonus the withholding rate is higher than normal.One thing I've noticed that absolutely DOES happen when I've worked a lot of OT (50-60+ hrs) in the past is you'll often see somewhat "diminishing returns" in terms of check-size as the hours tick up. (depending on withholding)
Never mind what working that many hours consistently does to your soul!
If you use a good W2 calculator (like the IRS's) and you have a good idea of what your total for the year will be, you can adjust your W2 to end up with the right amount of withholdings at the end of year even with the ups and downs.
My company only withholds based on base salary . I really wish I got extra 401K match with my OT, but oh well. Can't bitch too much since I get paid OT as an engineer (just straight time, though, not time and a half).This can happen, especially if you have additional percentages taken out of your paycheck going into retirement plans or investment plans, as those % are usually based on gross rather than net.