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Why is imputed income deducted from your paycheck?
i have imputed income taken out of my check because a have a significant other on my insurance can i use this as a tax deduction
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Answer It refers to the garnishment of wages by a creditor for repayment of a debt. States inact their own garnishment laws, the maximum amount allowed… by federal law is 25% of disposable income the first $154.50 of weekly wages are totally exempt. A garnishment order for debt can often be modified if "undue hardship" can be proven. These terms DO NOT apply to child support and in some cases spousal maintenance.
Answer All employers are required by law to withhold many taxes (and pay some others for) an employee. Any employer who arranges with you not to, (commonly called… paying you under the table), actually doesn't change your obligation to pay tax on your earnings. But, probably saves himself money at the cost of those benefits HE would have had to pay for you....like being able to ever collect unemployment or any disability or loss for injuries you may incur. Common sense should tell you an employer that will lie and cheat to hide a small amount of money from the authorities..isn't going to have any second thoughts about doing the same to you (or your customers)...or being cheap on things that may effect your safety...etc. To be paid without any employer tax withholding obligations you must be an "Independent Contractor", which differs from an employee in many ways....basically how work is dictated and that the boss really can't be "the boss" - since your independent....which as I guess is all he would have to give up to not have to be a liar, thief and cheat - as above - ...it is again a good indication of what your dealing with. By the way...if he had half a brain as a business man, don't you think he'd want to show as high a payroll as possible for the IRS? Generally, all payroll costs are expenses that are deductible without question..so he has a great tax deduction! Payroll, which your supposed to report to them - is easily audited and accepted. The nitwits that pay under the table make themselves liable for a criminal act, show they are disreputable in business dealings and do that to...many times....become a tax cheat and pay MORE than they should. (Or do you think that the actual payroll costs will magically appear when he needs them...because that isn't easily audited by comparing it to what was reported?)
Income that may not be seen as cash, but instead comes in the form of a benefit...sometimes by having another pay an expense...sometimes by having a benefit provided. …Examples: The value of a car provided by your employer that you may use for personal use. That value is imputed income. Likewise, the value of having some other benefits - over $50,000 a year of life insurance provided by your employer (the value of the insurance is imputed income). An employer sponsored (even if what it does just work to make the costs lower) of an on site cafeteria - imputed benefit. Having a below market rate loan...that some employers provide certain employees...the lower interest that they forgoe is a benefit to you...and hence imputed income.
No a fringe benefit does not get "deducted" from your paycheck in a traditional manner. If you receive a check for $1000 and $250 are total taxes, then your net is …$750. If you receive a check for $1200, which includes the $200 fringe, then taxes are $275, then your net is $275. The difference is that you have paid the taxes on the fringe benefit. Basically, your employer adds the fringe amount to your gross wages, figures the taxation, then removes the fringe to make is "wash".
Imputed income is not actual income, but is money that you have because you provide certain services for yourself instead of paying others for them, such as owning a house… instead of renting. It is very hard to determine the value of imputed income and is only very rarely taxable, and only under certain circumstances.
Generally, health premiums are deducted before-tax. This means that when you get your W-2 at the end of the year, the amount taken out for health premiums will already be dedu…cted from the total wages shown in Box 1. You put the total wages down on your tax return. This means that the health premiums are automatically deducted from your taxable wages with no special action required on your part. You cannot claim a second deduction since the premiums have already been deducted from the amount of your taxable wages shown in Box 1 of Form W-2. If you participate in some sort of health plan where deductions are made after-tax, that is the premiums have not already been deducted from the total shown in Box 1 of your W-2, then in that case you can claim a deduction of part of your health care deduction on Schedule A.
How much federal tax is deducted is determined by how many withholding allowances you select on Form W-4. Ask your employer's HR or payroll department for a Form W-4, fill it …out, and return it to them. How do you select the number of allowances? There are many calculators on the net that are designed to help you. The IRS has a calculator here: http://www.irs.gov/individuals/article/0,,id=96196,00.html Your state may have a similar form for state income taxes. After you choose the number of withholding allowances, you can see how much tax will be deducted from each paycheck by using the following calculator: http://www.paycheckcity.com/NetPayCalc/netpaycalculator.asp Do a "sanity check" on the amounts that are subtracted from your (and your spouse's if filing jointly) paychecks and make sure the amounts are roughly what you expect to owe in taxes at the end of the year. You should end up neither getting a refund nor owing the government more than $1000. If you are getting a refund, you can have a little less tax deducted by increasing the number of withholding allowances. If you are paying too much at the end of the year, you can have a little more tax deducted by decreasing the number of withholding allowances.
Probably the OASDI (FICA) (social security and medicare taxes) all mean the same tax. The maximum social security contribution limit is 6621 No limit on the amount of earn…ed income that is subject to the medicare tax rate of 1.45% of gross income. If you are a self employed taxpayer then you are responsible for all of your own FICA self employment taxes of 15.3% plus any income taxes on your net profit from your business operation at your marginal tax rate. For those with well above average income, the Federal income tax withholding may be far more than FICA; FICA is capped, but income tax is not.
Federal and state taxes should be deducted by your employer based on how you filled out your Form W-4 when you were hired. If you claim too many exemptions on your Form W-4 it… may result in no federal taxes being withheld. If you need to change the amount being deducted, you will need to fill out a new Form W-4. Contact the IRS or state tax agency for help in filling out your Form W-4. If you need a different Form W-4 for your state taxes, you may fill one out and write "State only" on the top before giving it to your employer. If your employer is refusing to withhold taxes from your pay, you can contact the IRS and submit a Form W-4 directly to them. This notifies the IRS that your employer is not complying with the law. If you are classified as a independent contractor, anyone who hires you does not make any payments on your behalf. Independent contractors are responsible for making estimated payments for their federal and state income taxes and Social Security taxes. They are also not eligible for unemployment. If you are concerned that you should not be an independent contractor, you should contact your state's employment department to determine if you are really an independent contractor or an employee (and your employer is illegally trying to save money by not classifying you as an employee).
Yes, imputed benefit income is subject to federal taxation. It is considered Taxable noncash compensation but is not included in gross pay.
Yes it is your net take home pay from your employer for your services.
First your paycheck with your take home pay (net pay after all deductions) that you have in your hand will not have anything withheld from it because it is issued to you after… all of the necessary taxes and other amounts that the employer is required to withhold from your gross wages, salary, earnings, etc. You should get this information from your employer payroll department as they will be the one that would know how much FICA, federal income tax, state income, local taxes, etc they will have to withhold from your hourly pay or gross pay for the pay period.
You NEVER do have any deductions for federal taxes or other items from your net take home paycheck when it is issued to you. You do NOT have any set percentage amount for this… purpose. You could have some other amounts beside the taxes that your employer payroll department would be required to calculate and withhold from your gross salary earnings before the payroll department would be able to issue you your net take home paychecks. You should ask the payroll department for some numbers because they would be the only one that would know all of the different amounts that they will be required to withhold. The amount of taxes that are withheld during this earning period is the same as estimated tax payments and if too much is withheld you will receive the over withheld amount back as a refund once your 2010 1040 federal and state income tax return is completely correctly and filed to the correct IRS address. If not enough federal and state income were withheld then you will end up owing some more taxes when the income tax returns are completed correctly and you will then have send the owed amounts with the income tax returns when they are filed in the year 2011.
Many taxes are deducted from your paycheck, but sales tax is not one of them. Sales taxes are collected by a merchant at the point of purchase of most goods and some services.… The merchant remits the sales taxes to the state on your behalf. Occasionally, you many not pay sales taxes at the time of purchase, as in when you make a purchase online from a merchant in another state. In those cases, you would owe a use tax to your state which is usually paid when filling out your annual state income tax return.