Federal Income Tax Withholding Brackets
January 22nd, 2007
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Question: Federal Tax and W-2 question – Why does my Federal Tax withheld differ?
I am income-illiterate, so bear with me.
So I was just looking at some past pay stubs for this year (2009). Just FYI I am paid bi-weekly. I noticed something:
One paycheck, I earned $637.50 and $64.98 was taken out for Federal Tax. That’s about 10%.
Next paycheck, I earned $225.00 and only $12.30 was taken out for Federal Tax (about 5%).
Then for the next seven paychecks I am making about $180.00-$200.00 and they don’t take anything out for Federal Tax!
My last paycheck I earned $643.50 and they took out $48.90.
I am confused…I thought 10% of my income was withheld (since I fall in the first bracket)? Why does the amount withheld vary so much? Is it because I go from full-time to part time? (I go to school as well).
Thanks!
Answer: Here's how it works: for each pay, the payroll tables (or computer calculations) assume that you pay will be the same year round. The system calculates your tax based on that total yearly income, less your standard deductions.
Because of the deductions, your projected yearly income might be nil if your pay check us low enough.
So if you earn a smaller amount, you pay less tax. If the pay is larger, your effective tax rate is higher.
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