Income tax / pay questions

[Big Dad]

Make the story as short as possible

We went to yearly bonus instead of monthly in 2016 , it is a series of fuzzy math things that they now do, hard to track

We get a % on each check to stay on line , then once its year its call a Up to balance the amount owed ( not a fan )

So, last December , they decided to give us a larger piece of what they owed us for the holidays

They hand wrote checks to us .. so, no idea what came out for ss, irs and it was a odd number like , $2264.60 --not , $2500.00

got my w2 ,thought year 2016 was over and done .


Now , we sat down with supervisor and went thru my numbers..

Everything ..great .. here is the gross bonus amount .. ( not enough to me but, ok) ..

get that check and its exactly 58% less than the number he told me I was going to get ..expected 25%-30% to go to my part of humanity but, not that much ..


So, I inquire and .. they never took taxes in 2016 for that 1st part now I have to pay that out of this .. I assume that is correct but, it would of been nice to know that is what they did

[Big A]

58% less sounds a tad high, but I can tell you that my commission checks are always a little more than 50% of what was earned, due to the way income tax withholding is done on that type of earnings. The IRS calculates the tax as if it were a weekly or bi-weekly installment, which makes it look like you make quite a bit more per year than you do, putting you in a higher tax bracket. I've got them taking nothing out of my salary payments, and still end up with a sizeable refund every year.

[Big Dad]

I guess ..

Just thought 2016 was over and done but nope ..

[Big A]

If you're getting hand-written checks, then it's not surprising that they under-withheld some taxes. 2016 should be "done with" though, they can't be withholding taxes in 2017 for income made in 2016. You would simply file 2016 with whatever withholdings were made, and owe whatever amount in taxes directly to the IRS.

I would be asking accounting/payroll for a more detailed break-down of what the check is for, what was withheld, and why. The only thing that makes sense is that they did make a withholding payment for that 2016 check, but forgot to actually take it out of the check.

[Big Dad]

So, if they forgot to take taxes in 2016 , they can't now legally take those taxes they forgot to take from my 2017 earnings

cause, that's what they are doing

[black2002ls]

So, if they forgot to take taxes in 2016 , they can't now legally take those taxes they forgot to take from my 2017 earnings

cause, that's what they are doing

Not necessarily. This would be similar to an instance where, say, you worked the last two weeks of 2016, but the paycheck for those 2 weeks was issued in 2017. That pay is considered 2017 pay, even though the work was done in 2016.

[Big A]

So, if they forgot to take taxes in 2016 , they can't now legally take those taxes they forgot to take from my 2017 earnings

cause, that's what they are doing

It depends on the situation. If, for example, they reported and paid the IRS $2k on your behalf as withholdings, but didn't take it out of your check, they are within their rights to recoup those funds as soon as the error is uncovered.

If they flat out forgot the withholdings altogether, then no, they shouldn't be trying to make up for it now, because you need to square that away directly with the IRS.

To clarify, any check that you've received since 1/01/17 is considered 2017 income, and taxes should be withheld for the 2017 filing. I get paid quarterly, and Q4's commision is reported on the following year's taxes every year, even though it was earned during a given year, I don't get the income until the next calendar year.

Only your employer can tell you exactly what's going on, anything from us is merely conjecture based on the limited information that you've provided.

[Big Dad]

The truth may never be known , I've heard both things

"forgot" and we paid it in advance ..but, I'll just forget about it I guess

[Big A]

Fuck that, we are talking about potentially a 10-57% discrepancy, they can't just take money without being clear about what it's for. If they indeed are being shady, they'll continue to bend you over. Even if not, you should know exactly where your money's going, it may come up on your 2017 return.

[DON SVO]

If the funds are paid to you as payroll, the company has to tax you unless you are a 1099 employee. Bonus checks get taxed on the applicable rate, then the taxation is adjusted at the end of the year when you file your tax return. The kicker is if they won't give you a check stub. If it is handwritten, technically they could be trying to pay you under the table and avoid paying payroll tax on the bonus.

You need to get your HR person to give you your tax information. If they DID file it with the IRS and amended their 2016 return on their end, you can bet your ass Uncle Sam will be asking for it this year. If they finally give up the info and it is filed this year (bonus paid this year so it's on 2017 payroll) you'll handle it like normal come tax time next year.

TL : DR get the numbers for the check.