Why was I taxed at a whopping 38% of my income?

[dave_the_nerd]

That's the part that pisses me off about taxes. So much of it gets completely wasted. A company or individual that actually worked for their money will do what is in the best interest to use it efficiently. Not the government.

You've never worked for a large organization/company. Or you did and weren't paying attention.

 

[shortylickens]

You've never worked for a large organization/company. Or you did and weren't paying attention.

I have, and they try to be very efficient. But only when their costs shoot up, like with taxes.

 

[shortylickens]

The government has NO motivation to be efficient, because they are spending other peoples money. Also it helps to get votes. Wasting money is actually better for the Fed.

 

[dave_the_nerd]

I have, and they try to be very efficient. But only when their costs shoot up, like with taxes.

Keyword: "Try."

 

[shortylickens]

The government does not Try. They have no incentive to do so. Michelle Obamas girlfriend from college got a fat overpriced government contract and that makes both of them very happy.

 

[Zenmervolt]

I have a contract job.

I billed 68 hours last week. And I get paid overtime, but at 1.0x.

I did some basic math and it shows I was taxed at a whopping 38%.

Why did this happen?

$4216
-$1631
38%

What did you actually take home? $4,216 or $2,585?

Because if $4,216 is what you actually took home, then the tax rate is 27.9%.

Also, as others have pointed out, that's withholding, not your actual tax amount. Withholding can be adjusted on your W4 forms. Withholding also includes your portion of the payroll tax, which is a tax levied in addition to the income tax and accounts for an extra 7.65% on top of your income tax amount.

ZV

 

[dbk]

FICA you're paying all of it.. (withholding)

 

[Zenmervolt]

Not at all. Tax rates used to be MUCH higher.

Yes and no. The highest rates possible in the graduated tables used to be significantly higher, but individuals' overall effective tax rates never hit those numbers you see published.

On persons not making millions of dollars, the effective rates now tend to be higher due to increases in payroll taxes (e.g. Medicare and Social Security taxes).

ZV

 

[spidey07]

FICA you're paying all of it.. (withholding)

Doubtful at that rate, from my quick calculations he's W2 and only paying 1/2.

 

[dbk]

Doubtful at that rate, from my quick calculations he's W2 and only paying 1/2.

Really? He says he's a contractor with billable hours. Wouldn't he subject to a 1099 and not a W-2??

 

[Engineer]

Really? He says he's a contractor with billable hours. Wouldn't he subject to a 1099 and not a W-2??

I don't know much about contracting (i.e. essentially self employed paying double FICA and all of your own taxes) but if that were the case, why would they be holding taxes out at all? Wouldn't he be responsible for paying taxes (quarterly) if that were the case?

Sounds to me like he is an employee of the company and may have a contract to work a certain length of time at a certain rate/benefits package.

 

[dave_the_nerd]

The government does not Try. They have no incentive to do so. Michelle Obamas girlfriend from college got a fat overpriced government contract and that makes both of them very happy.

When I had a cushy government job, getting people like you off my case was always incentive enough. :whiste:

Well, that and personal integrity.

Failing that, there's always the GAO.

 

[spidey07]

Really? He says he's a contractor with billable hours. Wouldn't he subject to a 1099 and not a W-2??

Depends on who is paying him and how.

 

[JEDI]

But, but, but! You're rich!

as long as our client is signing contract addendums w/o blinking at the new pricetag, yeah

on the other hand, working 12x7 gets old FAST

 

[Humpy]

I don't know much about contracting (i.e. essentially self employed paying double FICA and all of your own taxes) but if that were the case, why would they be holding taxes out at all? Wouldn't he be responsible for paying taxes (quarterly) if that were the case?

Sounds to me like he is an employee of the company and may have a contract to work a certain length of time at a certain rate/benefits package.

Yeah, so much of this thread doesn't make a bit of sense.

 

[MrSquished]

This.

$220K/year is the Federal 33% tax bracket. Whoever does your payroll just uses a simple formula that assumes you make a consistent wage week to week.

thats not quite how it works. the tax system is a progressive tiered one.

income over 186k but less than 405K is taxed at 33%. you can see the tiers below. that's why it is not possible to get a raise but get taxed more, because only income over the next tier hits the next tax rate.

http://www.forbes.com/sites/kellyph...brackets-standard-deduction-amounts-and-more/

 

[JamesV]

Someone has to pay for the top businesses in the US, so they can pay $0.00 taxes; you are one of the lucky ones that subsidize gold shower curtains for CEO's... how can you dare complain?

On the other side of the coin, I make NOTHING as a relative's care giver, and my health care plan option is a $5k deductible plan where I get to pay for CEO's yachts ($200 a month). Never spent $5k a year on health in my life, but that is my 'deal now?


Suck it up noob.

 

[Sonikku]

Make 8 figures and pay little to no taxes. Or better yet, make the IRS pay YOU money.

Simple.

 

[OverVolt]

38% is ludicrous. I don't care how much you make. Legalized robbery by the state/fed.

Look at your paycheck and total withholdings combined. Its usually ~38%

 

[jagec]

A company or individual that actually worked for their money will do what is in the best interest to use it efficiently.

 

[IAteYourMother]

May as well get taxed a little more and get free healthcare

 

[unokitty]

I have a ... job.

Me too. I feel your pain.

Uno

 

[Red Squirrel]

You've never worked for a large organization/company. Or you did and weren't paying attention.

Most companies are penny pinchers, sadly, they are more ready to let go of people to save money than to make things more efficient. The biggest thing these days is outsourcing. The bigger the company the less efficient they are though and go waste money on the stupidest crap.

But that's besides the point, I was referring more to individuals and small companies, I probably should have said business. Mom and pop shops, and stuff.

And even the most inefficient company is not going to waste money as much as the government does.

 

[shortylickens]

Me too. I feel your pain.

Uno

Yup, thats the democrats mantra.

 

[Engineer]

Yup, thats the democrats mantra.

So the 43% now who pay no "FEDERAL TAXES" (mind you that they pay about the same percent of OVERALL taxes as their percent of national income but don't let that little fact worry you) because of TAX CUTS (and incomes sinking below the pay threshold) is because of Democrat tax cuts? LOL.....