Friday, March 06, 2009

Want a bloody revolution?

End backup witholding, and have the IRS send everyone a bill every three months. There will be riots in the streets the next day.

As I mentioned a few days ago, I have a substantial bonus coming to me for my work last year.

So I got my pay and bonus today...

It's interesting how they choose to do the calculation.

Now, what SHOULD happen, is that my base pay is calculated at my normal rate (28%), and withheld at my normal rate. Then, my bonus should be calculated and withheld at whatever higher rate that would put me in if it was my actual salary (I did the math, it's 33%).

That would result in 28% (minus exemptions) being taken from my regular paycheck, and 33% (no exemptions) being taken from my bonus.

Instead, my entire pay and bonus were lumped together, my 401k (which has at least stopped losing money for now) contribution was taken out of both (again, bonus pay shouldn't be counted for such things), and the whole thing was taxed at 35% (minus exemptions), plus FICO, medicare/medicade and state taxes.

All told, they took $7000 out of my check today, $1600 of which was deductions and benefits (the normal amount is $600), and $5400 of which was for taxes... which was actually more in taxes than I have paid since the beginning of the year.

Now I'm going to need to adjust my withholding for the rest of the year to avoid being overwitheld. I don't give the government at interest free loan all year, just to be grateful when they give me back part of the money they've stolen from me.

Seriously, $5400 in taxes out of one check; and believe me I don't make so much that that doesn't sting, hard.